[X]
ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For
the fiscal year ended: JUNE 30, 2018

or

[ ]
TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For
the transition period from __________________________to _____________________________________

Commission
File Number: 2-78335-NY

(Exact
name of registrant as specified in its charter)

Nevada

90-0114535

(State
or other jurisdiction of incorporation or organization)

(I.R.S.
Employer identification Number)

5348
Vegas Drive, Las Vegas,

NV
89128

(Address
of principal executive offices)

(Zip
Code)

702-475-5430

(Registrant’s
telephone number, including area code)

Securities
registered pursuant to Section 12(b) of the Act:

Title
of class

Name
of each exchange on which registered

None

N/A

Securities
registered pursuant to Section 12(g) of the Act:

(Title
of class)

Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities

Act.
Yes [ ] No [X]

Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the

Act.
Yes [ ] No [X]

Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports) and
(2) has been subject to such filing requirements for the past 90 days.

Yes
[X] No [ ]

Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes
[X] No [ ]

Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (ss229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant’s knowledge, indefinitive proxy or information statement incorporated
by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

Yes
[X] No [ ]

Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.

Large
accelerated filer [ ]

Accelerated
filer [ ]

Non-accelerated
filer [ ]

Smaller
reporting company [X]

Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes
[ ] No [X]

State
the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price
at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day
of the registrant’s most recently completed fiscal quarter:

Indicate
the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As
of October 12, 2018, there were 173,485,570 shares of the registrant’s $0.001 par value Common Stock issued and outstanding,
excluding 5,673,327 shares reserved for a special dividend distribution, after adjustment for a 1:1,500 reverse split which came
into effect March 15, 2012.

The
statements contained in this annual report that are not historical facts are “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995 with respect to our financial condition, results of operations
and business, which can be identified by the use of forward-looking terminology, such as “estimates,” “projects,”
“plans,” “believes,” “expects,” “anticipates,” “intends,” or the negative
thereof or other variations thereon, or by discussions of strategy that involve risks and uncertainties. All forward-looking statements
are based largely on current expectations and beliefs concerning future events that are subject to substantial risks and uncertainties.
Actual results may differ materially from the results suggested herein. Factors that may cause or contribute to such differences
include, but are not limited to, the company’s ability to develop and successfully market the products and services described
in this report (and the costs associated therewith); their acceptance in the marketplace; technical difficulties or errors in
the products and/or services; the company’s customer and active prospect base containing a substantially lower number of
interested customers than the company anticipates; the failure to consummate the pending acquisitions, joint ventures and/or strategic
alliances at all (or on a timely basis) due to various reasons; difficulty integrating or managing multiple companies from technology,
operational and marketing aspects; the success (and cost) of new marketing strategies as a result of mergers and acquisitions;
unfavorable critical reviews; increased competition (including product and price competition); entrance of new competitors into
the market; timing and significance of additional new product and service introductions by the company and its competitors; general
economic and market factors, including changes in securities and financial markets; technology obsolescence, the adequacy of working
capital, cash flows and available financing to fund the company’s business model and the proposed acquisitions or investments
; and other risks and uncertainties indicated throughout this report and from time to time in the company’s releases and
filings including without limitation filings with the Securities and Exchange Commission. As used in this report, the terms “we,”
“us,” “our,” the “company” and “PHI” mean PHI Group, Inc. and the term “common
stock” means PHI Group, Inc.’s common stock, $.001 par value per share (unless context indicates a different meaning).

PART
I

ITEM
1. BUSINESS OVERVIEW

INTRODUCTION

PHI
Group, Inc. (the “Company” or “PHI”) is engaged in mergers and acquisitions as a principal (www.phiglobal.com).
The Company has adopted plans to acquire established operating businesses in selective industries and invest in various ventures
that may potentially create significant long-term value for our shareholders. In addition, the Company provides corporate finance
services, including merger and acquisition advisory and consulting services for client companies through our wholly owned subsidiary
PHI Capital Holdings, Inc. (www.phicapitalholdings.com). Furthermore, PHI has been actively pursuing the establishment
of a Luxembourg Bank Fund known as “Reserved Alternative Investment Fund” (“RAIF”), together with
a number of initial sub-funds for investment in agriculture, energy, real estate and other selective
projects. No assurances can be made that the Company will be successful in achieving its plans.

BACKGROUND

Originally incorporated on June 8, 1982 as
JR Consulting, Inc., a Nevada corporation, the Company applied for a Certificate of Domestication and filed Articles of Domestication
to become a Wyoming corporation on September 20, 2017. In the beginning, the Company was foremost engaged in mergers and acquisitions
and had an operating subsidiary, Diva Entertainment, Inc., which operated two modeling agencies, one in New York and one in California.
Following the business combination with Providential Securities, Inc., a California-based financial services company, the Company
changed its name to Providential Securities, Inc., a Nevada corporation, in January 2000. The Company then changed its name to
Providential Holdings, Inc. in February 2000. In October 2000, Providential Securities withdrew its securities brokerage membership
and ceased its financial services business. Subsequently, in April 2009, the Company changed its name to PHI Group, Inc. From
October 2000 to October 2011, the Company and its subsidiaries were engaged in mergers and acquisitions advisory and consulting
services, real estate and hospitality development, mining, oil and gas, telecommunications, technology, healthcare, private equity,
and special situations. In October 2011, the Company discontinued the operations of Providential Vietnam Ltd., Philand Ranch Limited,
a United Kingdom corporation (together with its subsidiaries Philand Ranch - Singapore, Philand Corporation - US, and Philand
Vietnam Ltd. - Vietnam), PHI Gold Corporation (formerly PHI Mining Corporation, a Nevada corporation), and PHI Energy Corporation
(a Nevada corporation), and mainly focused on acquisition and development opportunities in energy and natural resource businesses.
At the present, the Company is engaged in mergers and acquisitions as a principal and investments in natural resources, energy,
agriculture, consumer goods, technology and special situations. In addition, PHI Capital Holdings, Inc., a wholly owned subsidiary
of PHI, continues to provide corporate and project finance services, including merger and acquisition (M&A) advisory and consulting
services for other companies in a variety of industries. Furthermore, PHI is in the process of completing the formation of a Luxembourg
Bank Fund known as “Reserved Alternative Investment Fund” (“RAIF”) and a number of initial sub-funds thereunder
for investment in agriculture, energy, real estate and other selective projects, in accordance with
the Luxembourg Law of July 23, 2016 relative to reserved alternative investment funds, Law of August 23, 2016 relative to commercial
companies, and Modified Law of July 12, 2013 relative to alternative investment fund managers.

PHI
Capital Holdings, Inc., a Nevada corporation, was originally incorporated under the name of “Providential Capital, Inc.”
in 2004 as a wholly owned subsidiary of the Company to provide merger and acquisition (M&A) advisory services, consulting
services, project financing, and capital market services to clients in North America and Asia. In May 2010, Providential Capital,
Inc. changed its name to PHI Capital Holdings, Inc. This subsidiary has successfully managed merger plans for several privately
held and publicly traded companies and continues to focus on serving the Pacific Rim markets in the foreseeable future. This subsidiary
was re-domiciled as a Wyoming corporation on September 20, 2017.

AMERICAN
PACIFIC RESOURCES, INC.

American Pacific
Resources, Inc. (“APR”) is a Wyoming corporation established in April 2016 to serve as a holding company for various
natural resource projects. On September 2, 2017, APR entered into an Agreement of Purchase and Sale with Rush Gold Royalty, Inc.
(“RGR”), a Wyoming corporation, to acquire a 51% ownership in twenty-one mining claims over an area of approximately
400 acres in Granite Mining District, Grant County, Oregon, U.S.A., in exchange for a total purchase price of twenty-five million
U.S. Dollars ($US 25,000,000) to be paid in a combination of cash, convertible demand promissory note and PHI Group, Inc.’s
Class A Series II Convertible Cumulative Redeemable Preferred Stock (“Preferred Stock”). This transaction was closed
effective October 3, 2017. Following the first amendment dated April 19, 2018 and the second amendment dated September 29, 2018
retroactively effective April 20, 2018, to the afore-mentioned Agreement of Purchase and Sale, PHI Group, Inc. paid ten million
shares of its Class A Series II Convertible Cumulative Redeemable Preferred Stock, a convertible demand promissory note and cash
totaling $25,000,000 to Rush Gold Royalty, Inc. As of June 30, 2018, the balance of the convertible demand note was $24,048,500.00.

4

SPECIAL
STOCK DIVIDEND FROM AMERICAN PACIFIC RESOURCES, INC. SUBSIDIARY

On
April 23, 2018, the Company’s Board of Directors passed a resolution to declare a twenty percent (20%) special stock dividend
from its holdings of Common Stock in American Pacific Resources, Inc., a subsidiary of the Company, to shareholders of Common
Stock of the Company as follows: (a) Declaration date: April 23, 2018; (b) Record date: May 31, 2018; (c) Payment date: October
31, 2018; (d) Dividend ratio: All eligible shareholders of Common Stock of the Company as of the Record date shall be entitled
to receive two (2) shares of Common Stock of American Pacific Resources, Inc. for every ten (10) shares of Common Stock of PHI
Group, Inc. held by such shareholders as of the referenced Record date. As of the date of this report, the payment date is
expected to be rescheduled for March 29, 2019.

ABUNDANT
FARMS, INC.

Abundant
Farms, Inc., a Florida corporation formed on December 19, 2106, is engaged in organic farming activity. It seeks to acquire farmland,
form joint ventures with governments and other farmers, and lease arable land to grow select crops and medicinal plants that potentially
provide superior return on investment. It also plans to produce proprietary organic fertilizer and provides special water treatment
systems by PHI EZ Water Tech, Inc. for its own organic farming program and for sale to farmers worldwide. As of the date of this
report, Abundant Farms has not generated any revenue from operations.

PHI
GROUP REGIONAL CENTER, LLC

PHI
Group Regional Center, LLC was formed on March 23, 2017 with the intention to manage a new EB-5 Regional Center in
connection with the Company’s organic farming program, Abundant Farms, Inc., and other potential business activities in
the State of Florida. On April 27, 2017, an I-924 application was filed with the United
States Citizenship and Immigration Service (USCIS) for PHI Group Regional Center, LLC. Under the EB-5 Program, created
by Congress to stimulate the U.S. economy through job creation and capital investment, foreign entrepreneurs (and their spouses
and unmarried children under 21) are eligible to apply for a Green Card (permanent residence) if they make the necessary investment
in a commercial enterprise in the United States that creates or preserves at least 10 permanent, full-time jobs for qualified
U.S. workers. This subsidiary was dissolved effective September 29, 2018.

PHI
EZ WATER TECH, INC.

PHI
EZ Water Tech, Inc., a Wyoming corporation, is a majority-owned subsidiary of PHI Group that manages, manufactures and markets
a portfolio of innovative water treatment systems and other products developed by Dr. Martin Nguyen for agriculture, healthcare
and human consumption. Website: www.phiezwater.com. As of the date of this report, PHI EZ Water Tech, Inc. has not generated
any revenue from operations.

PHIVITAE
CORPORATION

PHIVITAE
CORPORATION, a Wyoming corporation, is a wholly-owned subsidiary of PHI Group set up with the intention to acquire a pharmaceutical
and medical equipment distribution company in Romania and to manage distribution of medical equipment and pharmaceutical products
to emerging markets. This subsidiary is currently inactive.

CONSTRUCTII
SA GROUP, INC.

CONSTRUCTII
SA GROUP, INC., a Delaware corporation, is a wholly-owned subsidiary of PHI Group set up with the intention to acquire a construction
and manufacturing company in Romania. This subsidiary in currently inactive.

5

LUXEMBOURG
RESERVED ALTERNATIVE INVESTMENT FUNDS

In
November 2017, the Company engaged a professional structuring agency and a leading Luxembourg law firm to assist the Company with
respect to the establishment of a Luxembourg Bank Fund known as “Reserved Alternative Investment Fund” (“RAIF”),
together with a number of initial sub-funds for agricultural, energy and real estate projects and investments, the PHI Asia Diamond
Exchange Fund and the PHI Sovereign Wealth Fund consisting of possible multi-country management sovereign wealth funds.

DISCONTINUED
OPERATIONS:

The
Company has discontinued the operations of Providential Vietnam Ltd., Philand Ranch Limited – UK (together with its subsidiaries
Philand Ranch Ltd-Singapore, Philand Corporation-USA and Philand Vietnam Ltd.), PHI Gold Corporation (now known as NS International
Corp.), and PHI Energy Corporation since June 30, 2012.

Cornerstone
Biomass Corporation, a Florida corporation set up in January 2015 by the Company and the principals of AG Materials, LLC, an Alabama
company, to engage in biomass energy was dissolved effective September 23, 2016.

SPUN-OFF
SUBSIDIARIES:

TANS
GLOBAL, INC. (Formerly PROVIMEX, INC.)

Provimex,
Inc. was originally formed on April 10, 2001 under the name “Providential Imex”, to focus on trade commerce with Vietnam.
This division changed its name to Provimex on July 5, 2001. Provimex began to generate revenues from its import and export activities
in August 2002 through the fiscal year ended June 30, 2005 and was incorporated as a Nevada corporation on September 23, 2004.
The Company distributed a 15% stock dividend of Provimex, Inc. to PHI Group, Inc.’s shareholders of record as of September
15, 2004. On June 3, 2011, Provimex, Inc. signed an agreement to acquire all the issued and outstanding capital stock of Humex
Medical Group Corp., a California corporation, (“Humex”) in exchange solely for a certain amount of shares of Provimex’s
common stock, par value 0.001, to engage in stem research and therapy in Southeast Asia. On June 13, 2012 this transaction was
rescinded in its entirety effective retroactively June 3, 2011. On June 19, 2012, Provimex, Inc. changed its name to HP.ITA Corporation.
On July 20, 2012, HP.ITA Corporation (“HPUS”) signed a Corporate Combination Agreement to merge with HP.ITA Joint
Stock Company (“HPVN”), a Vietnamese company, in order to go public in the United States but the Corporate Combination
Agreement was subsequently rescinded because HPVN was not able to implement its business plan and complete financial audits according
to the U.S. Generally Accepted Accounting Principals (“GAAP”). On September 16, 2016 HP.ITA Corp. changed its name
to Tans Global, Inc. with the intention to merge with an operating company in Vietnam and file a registration statement with the
Securities and Exchange Commission to become a fully reporting public company in the U.S. As of the date of this report, Tans
Global has discontinued the plan to merge with the contemplated operating company in Vietnam.

OMNI
RESOURCES, INC. (Formerly TOUCHLINK COMMUNICATIONS, INC.)

Touchlink
Communications was formed on July 7, 2003 as a division of the Company to provide point-of-sale (POS) terminals and prepaid calling
cards to retailers, convenient stores and non-profit organizations across the US. This subsidiary was later incorporated as a
Nevada corporation in February 2004 under the name of Touchlink Communications, Inc. as a wholly owned subsidiary of the Company
to provide long distance services to residential and business customers in the United States. The Company has declared a 15% stock
dividend of Touchlink Communications, Inc. to shareholders of record as of September 15, 2004. On November 03, 2008, this subsidiary
changed its name to Vietnam Media Group, Inc. with the intent to develop a multi-media business in Vietnam and subsequently resumed
the corporate name of Touchlink Communications, Inc. in February 2011. On April 4, 2014, this company changed its name to Asia
Green Corporation (“AGC”) and entered into a business combination agreement with Asia Green Limited Liability Company,
a Vietnam-based company, to become a holding company for agroforestry and afforestation business in Vietnam and Southeast Asia.
On July 28, 2014, AGC changed its corporate name to Omni Resources, Inc. The Company expects to hold about 10% equity interest
in Omni Resources, Inc. following Omni’s recapitalization. As of the date of this report Omni Resources, Inc. is inactive
and has not implemented any reorganization plan.

6

SOUTHEAST
ASIA CAPITAL GROUP, INC. (Formerly E-CHECK RECOVERY, INC.)

E-Check
Recovery, Inc. was formed in 2004 as a Nevada corporation to engage in financial services. This company has changed its name to
Southeast Asia Capital Group, Inc. and is being reorganized to engage in real estate development and investment as well as trading
of essential commodities. PHI Group, Inc. and its shareholders expect to hold 15% of equity in Southeast Asia Capital after the
reorganization.

STOCK
OWNERSHIPS:

CATALYST
RESOURCE GROUP, INC. (formerly JEANTEX GROUP, INC.)

As
of June 30, 2018, the Company owned 22,535,714 shares of Catalyst Resource Group, Inc. common stock, a Florida corporation, or
equivalent to 2.56%. This company is currently inactive.

MYSON
GROUP, INC. (formerly VANGUARD MINING CORPORATION)

As
of June 30, 2018, PHI Group, Inc. and PHI Capital Holdings, Inc., a wholly owned subsidiary of the Company, together owned 33,805,106
shares of Common Stock of Myson Group, Inc., a Nevada corporation currently traded on the OTC markets under the symbol “MYSN.”

SPORTS
POUCH BEVERAGE COMPANY, INC.

As
of June 30, 2018, the Company through PHI Capital Holdings, Inc. owned 292,050,000 shares of Sports Pouch Beverage Company, Inc.,
a Nevada corporation traded on the OTC Markets under the symbol “SPBV”.

ITEM
1A. RISK FACTORS

RISK
FACTORS

Investment
in our securities is subject to various risks, including risks and uncertainties inherent in our business. The following sets
forth factors related to our business, operations, financial position or future financial performance or cash flows which could
cause an investment in our securities to decline and result in a loss.

General
Risks Related to Our Business

Our
success depends on our management team and other key personnel, the loss of any of whom could disrupt our business operations.

Our
future success will depend in substantial part on the continued service of our senior management. The loss of the services of
one or more of our key personnel could impede implementation and execution of our business strategy and result in the failure
to reach our goals. We do not carry key person life insurance for any of our officers or employees. Our future success will also
depend on the continued ability to attract, retain and motivate highly qualified personnel in the diverse areas required for continuing
our operations. We cannot assure that we will be able to retain our key personnel or that we will be able to attract, train or
retain qualified personnel in the future.

Our
strategy in mergers and acquisitions involves a number of risks and we have a limited history of successful acquisitions. Even
when an acquisition is completed, we may have to continue our service for integration that may not produce results as positive
as management may have projected.

The
Company is in the process of evaluating various opportunities and negotiating to acquire other companies, assets and technologies.
Acquisitions entail numerous risks, including difficulties in the assimilation of acquired operations and products, diversion
of management’s attention from other business concerns, amortization of acquired intangible assets and potential loss of
key employees of acquired companies. We have limited experience in assimilating acquired organizations into our operations. Although
potential synergy may be achieved by acquisitions of related technologies and businesses, no assurance can be given as to the
Company’s ability to integrate successfully any operations, personnel, services or products that have been acquired or might
be acquired in the future. Failure to successfully assimilate acquired organizations could have a material adverse effect on the
Company’s business, financial condition and operating results.

7

Acquisitions
involve a number of special risks, including:

●

failure
of the acquired business to achieve expected results;

●

diversion
of management’s attention;

●

failure
to retain key personnel of the acquired business;

●

additional
financing, if necessary and available, could increase leverage, dilute equity, or both;

●

the
potential negative effect on our financial statements from the increase in goodwill and other intangibles; and

●

the
high cost and expenses of completing acquisitions and risks associated with unanticipated events or liabilities.

These
risks could have a material adverse effect on our business, results of operations and financial condition since the values of
the securities received for the consulting service at the execution of the acquisition depend on the success of the company involved
in acquisition. In addition, our ability to further expand our operations through acquisitions may be dependent on our ability
to obtain sufficient working capital, either through cash flows generated through operations or financing activities or both.
There can be no assurance that we will be able to obtain any additional financing on terms that are acceptable to us, or at all.

As
some of our business activities are currently involved with Southeast Asia and Eastern Europe, any adverse change to the economy
or business environment in these countries could significantly affect our operations, which would lead to lower revenues and reduced
profitability.

Some
of our business activities are currently involved with Southeast Asia and Eastern Europe. Because of this presence in specific
geographic locations, we are susceptible to fluctuations in our business caused by adverse economic or other conditions in this
region, including stock market fluctuation. A stagnant or depressed economy in these countries generally, or in any of the other
markets that we serve, could adversely affect our business, results of operations and financial condition.

Risks
associated with energy business

As
part of our core business involves acquisitions of energy assets as well as production and trading of energy commodities, our
profitability will depend on the prices we receive for energy commodities such as coal and wood pellets. These prices are dependent
upon factors beyond our control, including: the strength of the global economy; the demand for electricity; the global supply
of thermal coal and biomass products; weather patterns and natural disasters; competition within our industry and the availability
and price of alternatives, including natural gas; the proximity, capacity and cost of transportation; coal industry capacity;
domestic and foreign governmental regulations and taxes, including those establishing air emission standards for coal-fueled power
plants or mandating increased use of electricity from renewable energy sources; regulatory, administrative and judicial decisions,
including those affecting future mining permits; and technological developments, including those intended to convert coal-to-liquids
or gas and those aimed at capturing and storing carbon dioxide.

Risks
Related to Our Securities

Insiders
have substantial control over the company, and they could delay or prevent a change in our corporate control, even if our other
stockholders wanted such a change to occur.

Our
executive officers and directors as of October 12, 2018, in the aggregate, hold approximately 28.56% of our outstanding common
stock and have the majority voting rights associated with the Company’s Class B Series I Preferred Stock, which decision
may allow the Board of Directors to exercise significant control over all matters requiring stockholder approval, including the
election of directors and approval of significant corporate transactions. This could delay or prevent an outside party from acquiring
or merging with us even if our other stockholders wanted it to occur.

8

The
price at which investors purchase our common stock may not be indicative of the prevailing market price.

The
stock market often experiences significant price fluctuations that are unrelated to the operating performance of the specific
companies whose stock is traded. These market fluctuations could adversely affect the trading price of our shares. Investors may
be unable to sell their shares of common stock at or above their purchase price, which may result in substantial losses.

Since
we do not currently meet the requirements for our stock to be quoted on NASDAQ, NYSE MKT LLC or any other senior exchange, the
tradability in our securities will be limited under the penny stock regulations.

Under
the rules of the Securities and Exchange Commission, if the price of our securities on the OTCQB or OTC Markets is below $5.00
per share, our securities are within the definition of a “penny stock.” As a result, it is possible that our securities
may be subject to the “penny stock” rules and regulations. Broker-dealers who sell penny stocks to certain types of
investors are required to comply with the Commission’s regulations concerning the transfer of penny stock. These regulations
require broker-dealers to:

*Make
a suitability determination prior to selling penny stock to the purchaser;

*Receive
the purchaser’s written consent to the transaction; and

*Provide
certain written disclosures to the purchaser.

These
requirements may restrict the ability of broker/dealers to sell our securities, and may affect the ability to resell our securities.

Our
compliance with the Sarbanes-Oxley Act and SEC rules concerning internal controls may be time consuming, difficult and costly
for us.

It
may be time consuming, difficult and costly for us to develop and implement the internal controls and reporting procedures required
by the Sarbanes-Oxley Act. We may need to hire additional financial reporting, internal controls and other finance staff in order
to develop and implement appropriate internal controls and reporting procedures. If we are unable to comply with the internal
controls requirements of the Sarbanes-Oxley Act, we may not be able to obtain the independent accountant certifications that the
Sarbanes-Oxley Act requires publicly traded companies to obtain.

Our
success depends on our management team and other key personnel, the loss of any of whom could disrupt our business operations.

Our
future success will depend in substantial part on the continued service of our senior management and founder. The loss of the
services of one or more of our key personnel could impede implementation and execution of our business strategy and result in
the failure to reach our goals. We do not carry key person life insurance for any of our officers or employees. Our future success
will also depend on the continued ability to attract, retain and motivate highly qualified personnel in the diverse areas required
for continuing our operations. We cannot assure that we will be able to retain our key personnel or that we will be able to attract,
train or retain qualified personnel in the future.

Our
service strategy in merger and acquisition involves a number of risks and we have a limited history of successful acquisitions.
Even when an acquisition is completed, we may have to continue our service for integration that may not produce results as positive
as management may have projected.

The
Company is in the process of evaluating various opportunities and negotiating to acquire other companies and technologies. Acquisitions
entail numerous risks, including difficulties in the assimilation of acquired operations and products, diversion of management’s
attention from other business concerns, amortization of acquired intangible assets and potential loss of key employees of acquired
companies. We have limited experience in assimilating acquired organizations into our operations. Although potential synergy may
be achieved by acquisitions of related technologies and businesses, no assurance can be given as to the Company’s ability
to integrate successfully any operations, personnel, services or products that have been acquired or might be acquired in the
future. Failure to successfully assimilate acquired organizations could have a material adverse effect on the Company’s
business, financial condition and operating results.

9

Acquisitions
involve a number of special risks, including:

•

failure
of the acquired business to achieve expected results;

•

diversion
of management’s attention;

•

failure
to retain key personnel of the acquired business;

•

additional
financing, if necessary and available, could increase leverage, dilute equity, or both;

•

the
potential negative effect on our financial statements from the increase in goodwill and other intangibles; and

•

the
high cost and expenses of completing acquisitions and risks associated with unanticipated events or liabilities.

These
risks could have a material adverse effect on our business, results of operations and financial condition since the values of
the securities received for the consulting service at the execution of the acquisition depend on the success of the company involved
in acquisition. In addition, our ability to further expand our operations through acquisitions may be dependent on our ability
to obtain sufficient working capital, either through cash flows generated through operations or financing activities or both.
There can be no assurance that we will be able to obtain any additional financing on terms that are acceptable to us, or at all.

ITEM
1B. UNRESOLVED STAFF COMMENTS.

None.

ITEM
2. DESCRIPTION OF PROPERTIES

As
of June 30, 2018, the Company did not own any realty or equipment.

ITEM
3. LEGAL PROCEEDINGS

Other
than as set forth below, Company is not a party to any material pending legal proceedings and, to the best of its knowledge, no
such action by or against Company has been threatened.

This
case was originally submitted to Orange County Superior Court, CA on June 25, 1997, Case No. 781121, and subsequently moved to
NASD Dispute resolution for arbitration. On or about August 24, 2000, the Company’s legal counsel negotiated with the Claimant’s
counsel and unilaterally reached a settlement without the Company’s prior consent. While the Company was in the process
of re-negotiating the terms of said settlement, the Claimants filed a request for arbitration hearing before the National Association
of Securities Dealers on October 4, 2000, Case No. 99-03160. Thereafter, the Claimants filed a complaint with the Orange County
Superior Court, CA on October 31, 2000, Case No. 00CC13067 for alleged breach of contract for damages in the sum of $75,000 plus
pre-judgment interest, costs incurred in connection with the complaint, and other relief. Without admitting or denying any allegations,
the Company reached a settlement agreement with the Claimants whereby the Company would pay the Claimants a total of $62,500 plus
$4,500 in administrative costs. As the date of this report, the Company has paid $2,500 and is subject to an entry of judgment
for $79,000. In May 2011, the Claimants filed an application for and renewal of judgment for a total of $140,490.78. As of June
30, 2018 the Company accrued $172,091 for potential liabilities in connection with this case in the accompanying consolidated
financial statements.

10

WILLIAM
DAVIDSON VS. DOAN ET AL.

On
or about February 01, 2010, the company was notified of a suit that was filed with the Superior Court of the State of California
for the County of Los Angeles on November 24, 2009 by William Davidson, an individual against Martin Doan, Henry Fahman, Benjamin
Tran, HRCiti Corporation, and Providential Capital, Inc. (collectively referred to as “Defendants” - Case No. BC 426831).
Plaintiff demanded an amount of not less than $140,000.00 from Defendants for promissory notes outstanding between Plaintiff and
the company.

On
July 09, 2012 William Davidson and PHI Capital Holdings, Inc. (formerly Providential Capital, Inc.), a subsidiary of the Company,
reached a settlement agreement with respect to whereby PHI Capital agreed to pay William Davidson a total of $200,000 over a period
of nineteen months beginning September 1, 2012. Since November 30, 2012, William Davidson has converted portions of the total
amount into common stock of PHI Group, Inc. in lieu of cash payment. The Company has accrued $90,000 as the required liability
associated with the balance of these notes in the accompanying consolidated financial statements as of June 30, 2018.

ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

PART
II

ITEM
5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The
Company’s Common Stock is currently trading on the OTC Markets under the symbol “PHIL”. The following sets forth
the high and low prices of the Company’s Common Stock in the US for the most recent month, two most recent quarters and
each quarter during the preceding two fiscal years.

The
prices for the Company’s common stock quoted by brokers are not necessarily a reliable indication of the value of the Company’s
common stock.

Per
Share Common Stock Prices for the Month

High

Low

Ended
September 30, 2018

0.0115

0.0075

Per
Share Common Stock Prices for the Quarters

High

Low

Ended
September 30, 2018

0.0460

0.0075

Ended
June 30, 2018

0.0700

0.0160

Per
Share Common Stock Prices by Quarter;

For
the Fiscal Year Ended June 30, 2018

High

Low

Quarter
Ended June 30, 2018

0.0700

0.0160

Quarter
Ended March 31, 2018

0.0798

0.0110

Quarter
Ended December 31, 2017

0.0988

0.0100

Quarter
Ended September 30, 2017

0.1942

0.0140

Per
Share Common Stock Prices by Quarter;

For
the Fiscal Year Ended June 30, 2017

High

Low

Quarter
Ended June 30, 2017

0.0900

0.0200

Quarter
Ended March 31, 2017

0.2500

0.0600

Quarter
Ended December 31, 2016

0.4500

0.1000

Quarter
Ended September 30, 2016

2.0000

0.2000

11

Holders
of Common Equity:

There
are approximately 1,574 shareholders of record of the Company’s common stock, of which 1,281 are active.

Dividends:

Cash
dividend: The Company has not declared or paid a cash dividend to common stock shareholders since the Company’s inception.
The Board of Directors presently intends to retain any earnings to finance company operations and does not expect to authorize
cash dividends to common shareholders in the foreseeable future. Any payment of cash dividends in the future will depend upon
Company’s earnings, capital requirements and other factors.

Share
dividend: On March 12, 2012 the Board of Directors of the Company declared a special stock dividend to shareholders of Common
Stock of the Company with the following stipulations: (a) Declaration date: March 16, 2012; (b) Record date: June 15, 2012; (c)
Payment date: September 17, 2012; (d) Dividend ratio: All eligible shareholders of Common Stock of the Company as of the Record
date shall receive three new shares of Common Stock of the Company for each share held by such shareholders as of the referenced
record date. The purpose of this special stock dividend was to partially mitigate the impact of the dilution in connection with
the 1-for-1,500 reverse split of the Common Stock on the Company’s long-term shareholders and reward them for staying with
the Company. On June 6, 2012, the Company’s Board of Directors passed a resolution to change the record date for the special
stock dividend to July 31, 2012 and the distribution date to November 30, 2012. The Company has reserved a total of 5,673,327
shares of Common Stock for this special dividend distribution and will reset a new distribution date when a registration statement
for the dividend shares is declared effective by the Securities and Exchange Commission.

ITEM
6. SELECTED FINANCIAL DATA

JUNE 30,

2018

2017

2016

2015

2014

Net revenues

$

1,672,659

$

113,500

$

332,050

$

127,178

$

77,439

Income (loss) from operations

$

(230,307

)

$

(556,958

)

$

(132,871

)

$

(305,912

)

$

(304,043

)

Net other income (expense)

$

(1,796,013

)

$

(1,003,760

)

$

124,873

$

(1,063,003

)

$

48,048

Net income (loss )

$

(2,026,320

)

$

(1,560,718

)

$

(7,998

)

$

(1,368,915

)

$

(255,994

)

Net income ( loss ) per share

$

(0.03

)

$

(0.10

)

$

-

$

(0.21

)

$

(0.04

)

Total assets

$

27,424,139

$

674,064

$

753,990

$

448,780

$

444,100

Total liabilities

$

32,268,886

$

8,187,545

$

7,755,950

$

9,430,260

$

9,585,282

ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Except
for the audited historical information contained herein, this report specifies forward-looking statements of management of the
Company within the meaning of Section 27a of the Securities Act of 1933 and Section 21e of the Securities Exchange Act of 1934
(“forward-looking statements”) including, without limitation, forward-looking statements regarding the Company’s
expectations, beliefs, intentions and future strategies. Forward-looking statements are statements that estimate the happening
of future events and are not based on historical facts. Forward- looking statements may be identified by the use of forward-looking
terminology, such as “could”, “may”, “will”, “expect”, “shall”, “estimate”,
“anticipate”, “probable”, “possible”, “should”, “continue”, “intend”
or similar terms, variations of those terms or the negative of those terms. The forward-looking statements specified in this report
have been compiled by management of the Company on the basis of assumptions made by management and considered by management to
be reasonable. Future operating results of the Company, however, are impossible to predict and no representation, guaranty, or
warranty is to be inferred from those forward-looking statements. The assumptions used for purposes of the forward-looking statements
specified in this report represent estimates of future events and are subject to uncertainty as to possible changes in economic,
legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information
and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment.
To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results,
and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. In addition, those forward-looking
statements have been compiled as of the date of this report and should be evaluated with consideration of any changes occurring
after the date of this report. No assurance can be given that any of the assumptions relating to the forward-looking statements
specified in this report are accurate and the Company assumes no obligation to update any such forward-looking statements.

12

RESULTS
OF OPERATIONS FOR THE YEARS ENDED JUNE 30, 2018 AND JUNE 30, 2017

Revenues:

The
Company generated $1,672,659 in revenues from sales, consulting, advisory and management services during the fiscal year ended
June 30, 2018, as compared to $113,500 in revenue for the year ended June 30, 2017. The increase of $1,559,159 in total revenues
between the two periods was due to increases in sales of $432,000 and advisory fees of $1,127,159.

Operating
Expenses:

The
Company incurred total operating expenses of $1,902,966 for the year ended June 30, 2018 as compared to $670,458 for the year
ended June 30, 2017. This represents an increase of $1,232,508 or 183.83 % in total operating expenses from the prior year. The
increase was due to an increase of $ 1,196,900 in professional services primarily related to the setup of the Luxembourg institutional
bank fund and an increase of $ 35,816 in general and administrative expenses between the two fiscal years.

Income
(loss) from operations:

The
Company had a loss from operations of $230,307 for the fiscal year ended June 30, 2018 as compared to a loss from operations of
$556,958 for the fiscal year ended June 30, 2017. This represents a decrease of $326,651 or 58.65% % in loss from operations during
the current fiscal year as compared to that of the precious year. This was mainly due to the fact that the Company generated more
revenues while simultaneously incurring comparably more expenses in connection with the setup of the Luxembourg institutional
bank fund during the fiscal year ended June 30, 2018.

Other
income (expense)

The
Company had a net other expense of $1,796,013 for the fiscal year ended June 30, 2018 as compared to a net other expense of $1,003,760
for the prior year. This was primarily due to the fact the Company had an increase in interest expense of $826,174 and an increase
in other expense of $26,243.86, while there was no loss on sale of assets and marketable securities in the current fiscal year.

Net
income (loss):

The
Company had a net loss of $2,026,320 for the fiscal year ended June 30, 2018, as compared to a net loss of $1,560,718 for the
prior year, representing an increase of $465,603 in net loss between the two fiscal years. The net loss per share based on the
basic and diluted weighted average number of common shares outstanding for the fiscal year ended June 30, 2018 was $(0.03) as
compared to $(0.10) for the fiscal year ended June 30, 2017.

13

CASH
FLOWS

We
had $13,937 in cash and cash equivalents of as of June 30, 2018, as compared to $38,369 in cash and cash equivalents as of June
30, 2017, respectively.

Net
cash used in our operating activities was $1,955,640 for the fiscal year ended June 30, 2018 as compared to net cash used in operating
activities of $6,924,748 for the fiscal year ended June 30, 2017, respectively. The underlying reasons for the decrease in net
cash used in operating activities between the two periods were mainly due to an increase in net loss from operations of $465,602
and an increase of $962,789 in other assets and pre-paid expenses in the current fiscal year as compared to the previous fiscal
year, offset by an increase in accrued expenses of $6,396,999 between the two periods.

Net
cash used in investing activities was $25,702,841 for the fiscal year ended June 30, 2018 as compared to cash provided by investing
activities of $224,688 for the fiscal year ended June 30, 2017, respectively. The underlying reasons for the change in net cash
provided by (used in) investing activities between the two fiscal years were primarily due to a $25 million acquisition of mineral
assets by American Pacific Resources, Inc., a subsidiary of the Company, an investment in Aquarius Power, Inc. in the amount of
$5,000 and the recognition of $697,841 for contract liability in connection with a service agreement with a client/partner during
the fiscal year ended June 30. 2018.

Net
cash provided by financing activities was $27,634,050 for the fiscal year ended June 30, 2018 as compared to cash provided by
financing activities of $6,735,447 for the fiscal year ended June 30, 2017, respectively. The underlying reasons for the increase
in cash provided by financing activities during the current fiscal year were primarily due to the demand promissory note issued
for the purchase of the mining claims in Oregon by American Pacific Resources, Inc. and the change Common Stock of $2,596,453
in the current fiscal year, as compared to the prior fiscal year.

HISTORICAL
FINANCING ARRANGEMENTS

SHORT
TERM NOTES PAYABLE AND ISSUANCE OF COMMON STOCK

In
the course of its business, the Company has obtained short-term loans from individuals and institutional investors and from time
to time raised money by issuing restricted common stock of the Company under the auspices of Rule 144. These notes bear interest
rates ranging from 0% to 36% per annum. (Notes 11 & 15).

CONVERTIBLE
PROMISSORY NOTES

The
Company has also from time to time issued convertible promissory notes to various private investment funds for short-term working
capital and special projects. Typically these notes bear interest rates from 5% to 12% per annum, mature within one year, are
convertible to common stock of the Company at a discount ranging from 42% to 50%, and may be repaid within 180 days at a prepayment
premium ranging from 130% to 150%. (Note 11)

COMPANY’S
PLAN OF OPERATION FOR THE FOLLOWING 12 MONTHS

In
the next twelve months the Company intends to focus on completing the establishment and deployment of the contemplated institutional
bank fund in Luxembourg, together with a number of sub-funds, for investing in a number of selective industries, as well as developing
the Asia Diamond Exchange in Vietnam. In addition, the Company continues to carry out its merger and acquisition program by acquiring
all or controlling interests in certain target companies and also plans to invest in special situations that may potentially generate
significant revenues and profitability for the Company in the short term. Moreover, we will also provide advisory and consulting
services to international clients through our wholly owned subsidiary PHI Capital Holdings, Inc.

FINANCIAL
PLANS

MATERIAL
CASH REQUIREMENTS: We must raise substantial amounts of capital to fulfill our plan of acquiring energy-related and natural resource
assets as well as investing in special situations as part of our scope of business. We intend to use equity, debt and project
financing to meet our capital needs for acquisitions and investments.

Management
has taken action and formulated plans to meet the Company’s operating needs through June 30, 2019 and beyond. The working
capital cash requirements for the next 12 months are expected to be generated from operations, sale of marketable securities and
additional financing. The Company plans to generate revenues from its consulting services, merger and acquisition advisory services,
and acquisitions of target companies with cash flows.

14

AVAILABLE
FUTURE FINANCING ARRANGEMENTS: The Company may use various sources of funds, including short-term loans, long-term debt, equity
capital, and project financing as may be necessary. The Company believes it will be able to secure the required capital to implement
its business plan.

EQUITY
LINE FACILITY

On
March 6, 2017, PHI Group, Inc., a Nevada corporation (the “Company”) and Azure Capital, a Massachusetts Corporation
(the “Investor”) entered into an Investment Agreement (the “Investment Agreement”) and a Registration
Rights Agreement (the “Registration Rights Agreement”), each dated March 6, 2017 between the Company and the Investor.

Pursuant
to the Investment Agreement, the Investor committed to purchase, subject to certain restrictions and conditions, up to $10,000,000
worth of the Company’s common stock, over a period of 36 months from the effectiveness of the registration statement registering
the resale of shares purchased by the Investor pursuant to the Investment Agreement. The Company agreed to initially reserve 20,000,000
shares of its Common Stock for issuance to the Investor pursuant to the Investment Agreement. In the event the Company cannot
register a sufficient number of shares of its Common Stock for issuance pursuant to the Investment Agreement, the Company will
use its best efforts to authorize and reserve for issuance the number of shares required for the Company to perform its obligations
in connection with the Investment Agreement as soon as reasonable practical.

The
Company may in its discretion draw on the facility from time to time, as and when the Company determines appropriate in accordance
with the terms and conditions of the Investment Agreement. The maximum number of shares that the Company is entitled to put to
the Investor in any one draw down notice shall not exceed shares with a purchase price of $250,000 or 200% of the average daily
volume (U.S. market only) of the Company’s Common Stock for the three (3) Trading Days prior to the applicable put notice
date multiplied by the average of the three (3) daily closing prices immediately preceding the put date, calculated in accordance
with the Investment Agreement. The Company may deliver a notice for a subsequent put from time to time, after the pricing period
for the prior put has been completed.

The
purchase price shall be set at ninety-four percent (94%) of the lowest daily volume weighted average price (VWAP) of the Company’s
common stock during the five (5) consecutive trading days immediately following the put notice date. On each put notice submitted
to the Investor by the Company, the Company shall specify a suspension price for that put. In the event the price of Company’s
Common Stock falls below the suspension price, the put shall be temporarily suspended. The put shall resume at such time the price
of the Company’s Common Stock is above the suspension price, provided the dates for the pricing period for that particular
put are still valid. In the event the pricing period has been complete, any shares above the suspension price due to the Investor
shall be sold to the Investor by the Company at the suspension price under the terms of the Investment Agreement. The suspension
price for a put may not be changed by the Company once submitted to the Investor.

There
are put restrictions applied on days between the draw down notice date and the closing date with respect to that particular put.
During such time, the Company shall not be entitled to deliver another draw down notice. In addition, the Investor will not be
obligated to purchase shares if the Investor’s total number of shares beneficially held at that time would exceed 4.99%
of the number of shares of the Company’s common stock as determined in accordance with Rule 13d-1(j) of the Securities Exchange
Act of 1934, as amended. In addition, the Company is not permitted to draw on the facility unless there is an effective registration
statement to cover the resale of the shares.

15

The
Investment Agreement also contains customary representations and warranties of each of the parties. The assertions embodied in
those representations and warranties were made for purposes of the Investment Agreement and are subject to qualifications and
limitations agreed to by the parties in connection with negotiating the terms of the Investment Agreement. The Investment Agreement
further provides that the Company and the Investor are each entitled to customary indemnification from the other for, among other
things, any losses or liabilities they may suffer as a result of any breach by the other party of any provisions of the Investment
Agreement or Registration Rights Agreement (as defined below). Investor should read the Investment Agreement together with the
other information concerning the Company that the Company publicly files in reports and statements with the Securities and Exchange
Commission (the “SEC”).

Pursuant
to the terms of the Registration Rights Agreement, the Company is obligated to file one or more registrations statements with
the SEC within twenty-one (21) days after the date of the Registration Rights Agreement to register the resale by the Investor
of the shares of common stock issued or issuable under the Investment Agreement. In addition, the Company is obligated to use
all commercially reasonable efforts to have the registration statement declared effective by the SEC within 90 days after the
registration statement is filed.

This
Investment Agreement was amended on August 3, 2017 to allow for the reservation of 65,445,000 shares of the Company’s Common
Stock for issuance to the Investor pursuant to the corrected Investment Agreement.

The
Company has filed a S-1 Registration Statement with the Securities and Exchange Commission to include 7,936,600 shares of its
Common Stock for issuance in connection with the first tranche of the Equity Line Facility. The S-1 Registration Statement, as
amended, was declared effective by the Securities and Exchange Commission on January 11, 2018. As of the day of this report, the
Company has not accessed the Equity Line Facility for funding.

ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The
following discussion about PHI Group Inc.’s market risk involves forward-looking statements. Actual results could differ
materially from those projected in the forward-looking statements.

Currency
Fluctuations and Foreign Currency Risk

Some
of our acquisition targets and partner companies are located outside of the United States and use currencies other than the U.S.
dollar as the official currencies of those countries. The fluctuations of exchange rates in these countries may affect the value
of our business.

Interest
Rate Risk

We
do not have significant interest rate risk, as most of our debt obligations are primarily short-term in nature to individuals,
with fixed interest rates.

Valuation
of Securities Risk

Since
majority of our income is paid with the marketable securities, the value of our assets may fluctuate significantly depending on
the market value of the securities we hold.

We
have audited the accompanying balance sheet of PHI GROUP INC. (the “Company”) as of June 30, 2018, the related
statement of operations, changes in stockholders’ equity (deficit) and cash flows, and the related notes [and schedules] (collectively
referred to as the “financial statements”). The financial statements of the Company for the year ended June 30, 2017
were audited by other auditors, whose report, dated October 12, 2017 expressed an unqualified opinion on those financial statements.
Our opinion, in so far as it relates to the year end June 30, 2017, is based solely on the report of other auditors. In our opinion,
the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2018 and
the results of its operations and its cash flows for the period ended June 30, 2018, in conformity with accounting principles
generally accepted in the United States of America.

Basis
for Opinion

These
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s
financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight
Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error
or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a
test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the
financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical
Audit Matters

The
critical audit matters communicated below are matters arising from the current period audit of the financial statements that were
communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material
to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of
critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by
communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or
disclosures to which they relate.

There are no critical audit matters.

The
Company’s financial statements are prepared using the generally accepted accounting principles applicable to a going concern,
which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has
an accumulated deficit of $ 40,551,299 and stockholders’ deficit of $4,844,747 as of June 30, 2018. These factors as discussed
in Note 22 of the financial statements raise substantial doubt about the Company’s ability to continue as a going concern. Management’s
plans in regard to these matters are also described in Note 22. The consolidated financial statements do not include any adjustments
that might result from the outcome of these uncertainties.

The
accompanying notes form an integral part of these audited consolidated financial statements

F-5

PHI
GROUP, INC. AND SUBSIDIARIES

(FORMERLY
PROVIDENTIAL HOLDINGS, INC.)

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE
1 – NATURE OF BUSINESS

ITEM
1. BUSINESS OVERVIEW

PHI
Group, Inc. (the “Company” or “PHI”) is engaged in mergers and acquisitions as a principal (www.phiglobal.com).
The Company has adopted plans to acquire established operating businesses in selective industries and invest in various ventures
that may potentially create significant long-term value for our shareholders. In addition, the Company provides corporate finance
services, including merger and acquisition advisory and consulting services for client companies through our wholly owned subsidiary
PHI Capital Holdings, Inc. (www.phicapitalholdings.com). Furthermore, PHI has been actively pursuing
the establishment of a Luxembourg Bank Fund known as “Reserved Alternative Investment Fund” (“RAIF”) together
with a number of initial sub-funds for investment in agriculture, energy, real estate and other selective
projects. No assurances can be made that the Company will be successful in achieving its plans.

Originally
incorporated on June 8, 1982 as JR Consulting, Inc., a Nevada corporation, the Company applied for a Certificate of Domestication
and filed Articles of Domestication to become a Wyoming corporation on September 20, 2017. In the beginning, the Company was foremost
engaged in mergers and acquisitions and had an operating subsidiary, Diva Entertainment, Inc., which operated two modeling agencies,
one in New York and one in California. Following the business combination with Providential Securities, Inc., a California-based
financial services company, the Company changed its name to Providential Securities, Inc., a Nevada corporation, in January 2000.
The Company then changed its name to Providential Holdings, Inc. in February 2000. In October 2000, Providential Securities withdrew
its securities brokerage membership and ceased its financial services business. Subsequently, in April 2009, the Company changed
its name to PHI Group, Inc. From October 2000 to October 2011, the Company and its subsidiaries were engaged in mergers and acquisitions
advisory and consulting services, real estate and hospitality development, mining, oil and gas, telecommunications, technology,
healthcare, private equity, and special situations. In October 2011, the Company discontinued the operations of Providential Vietnam
Ltd., Philand Ranch Limited, a United Kingdom corporation (together with its subsidiaries Philand Ranch - Singapore, Philand Corporation
- US, and Philand Vietnam Ltd. - Vietnam), PHI Gold Corporation (formerly PHI Mining Corporation, a Nevada corporation), and PHI
Energy Corporation (a Nevada corporation), and mainly focused on acquisition and development opportunities in energy and natural
resource businesses. At the present, the Company is engaged in mergers and acquisitions as a principal and investments in natural
resources, energy, agriculture, consumer goods, technology and special situations. In addition, PHI Capital Holdings, Inc.,
a wholly owned subsidiary of PHI, continues to provide corporate and project finance services, including merger and acquisition
(M&A) advisory and consulting services for other companies in a variety of industries. Furthermore, PHI is in the process
of completing the formation of a Luxembourg Bank Fund known as “Reserved Alternative Investment Fund” (“RAIF”)
and a number of initial sub-funds thereunder for investment in agriculture, energy, real estate and other
selective projects, in accordance with the Luxembourg Law of July 23, 2016 relative to reserved alternative investment
funds, Law of August 23, 2016 relative to commercial companies, and Modified Law of July 12, 2013 relative to alternative investment
fund managers.

The
preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States
of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those estimates.

CASH
AND CASH EQUIVALENTS

The
Company considers all liquid investments with a maturity of three months or less from the date of purchase that are readily convertible
into cash to be cash equivalents.

MARKETABLE
SECURITIES

The
Company’s securities are classified as available-for-sale and, as such, are carried at fair value. Securities classified
as available-for-sale may be sold in response to changes in interest rates, liquidity needs, and for other purposes.

Each
investment in marketable securities typically represents less than twenty percent (20%) of the outstanding common stock and stock
equivalents of the investee, and each security is quoted on a national exchange or on the OTC Markets. As such, each investment
is accounted for in accordance with the provisions of ASC 320 (previously SFAS No. 115).

Unrealized
holding gains and losses for available-for-sale securities are excluded from earnings and reported as a separate component of
stockholder’s equity. Realized gains and losses for securities classified as available-for-sale are reported in earnings
based upon the adjusted cost of the specific security sold. On June 30, 2018 and 2017 the marketable securities have been recorded
at $1,100,483 and $502,696, respectively based upon the fair value of the marketable securities at that time.

ACCOUNTS
RECEIVABLE

Management
reviews the composition of accounts receivable and analyzes historical bad debts. As of June 30, 2018, the Company had $432,000
in accounts receivable.

IMPAIRMENT
OF LONG-LIVED ASSETS

Effective
January 1, 2002, the Company adopted ASC 350 (Previously SFAS 144, “Accounting for the Impairment or Disposal of Long-Lived
Assets”), which addresses financial accounting and reporting for the impairment or disposal of long-lived assets and supersedes
SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,” and
the accounting and reporting provisions of APB Opinion No. 30, “Reporting the Results of Operations for a Disposal of a
Segment of a Business.” The Company periodically evaluates the carrying value of long-lived assets to be held and used in
accordance with ASC 350. ASC 350 requires impairment losses to be recorded on long-lived assets used in operations when indicators
of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’
carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market
value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair
market values are reduced for the cost of disposal.

PROPERTY
AND EQUIPMENT

Property
and equipment are stated at cost. Maintenance and repair costs are charged to expense as incurred; costs of major additions and
betterments are capitalized. When property and equipment are sold or otherwise disposed of, the cost and related accumulated depreciation
are eliminated from the accounts and any resulting gain or loss is reflected in income. Depreciation is computed using the straight-line
method over the estimated useful lives of the assets, ranging from three to ten years.

F-7

DEPRECIATION
AND AMORTIZATION

The
cost of property and equipment is depreciated over the estimated useful lives of the related assets. Depreciation and amortization
of fixed assets are computed on a straight-line basis.

NET
EARNINGS (LOSS) PER SHARE

The
Company adopted the provisions of ASC 260 (previously SFAS 128). ASC 260 eliminates the presentation of primary and fully diluted
earnings per share (“EPS”) and requires presentation of basic and diluted EPS. Basic EPS is computed by dividing income
(loss) available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS
is based on the weighted-average number of shares of common stock outstanding for the period and common stock equivalents outstanding
at the end of the period.

The
net earnings (loss) per share is computed as follows:

2018

2017

Basic
and diluted net loss per share:

Numerator:

Net
income (loss)

$

(2,026,320

)

$

(1,560,718

)

Denominator:

Basic
weighted average number of common shares outstanding

72,797,797

15,553,354

Basic
net income (loss) per share

$

(0.03

)

$

(0.10

)

Diluted
weighted average number of common shares outstanding

72,797,797

15,553,354

Diluted
net income (loss) per share

$

(0.03

)

$

(0.10

)

STOCK-BASED
COMPENSATION

Effective
July 1, 2006, the Company adopted ASC 718-10-25 (previously SFAS 123R) and accordingly has adopted the modified prospective application
method. Under this method, ASC 718-10-25 is applied to new awards and to awards modified, repurchased, or cancelled after the
effective date. Additionally, compensation cost for the portion of awards that are outstanding as of the date of adoption for
which the requisite service has not been rendered (such as unvested options) is recognized over a period of time as the remaining
requisite services are rendered.

FAIR
VALUE OF FINANCIAL INSTRUMENTS

Fair
Value - Definition and Hierarchy

Fair
value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. Assets and liabilities measured at fair value are categorized based on whether
or not the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial
assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair
value measurement.

A
fair value hierarchy for inputs is used in measuring fair value that maximizes the use of observable inputs and minimizes the
use of unobservable inputs by requiring that the most observable inputs are to be used when available.

F-8

Valuation
techniques that are consistent with the market or income approach are used to measure fair value. The fair value hierarchy is
categorized into three levels based on the inputs as follows:

Level
1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the
ability to access.

Level
2 - Valuations based on inputs other than quoted prices included in Level 1 that are observable, either directly or indirectly.

Level
3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

Fair
value is a market-based measure, based on assumptions of prices and inputs considered from the perspective of a market participant
that are current as of the measurement date, rather than an entity-specific measure. Therefore, even when market assumptions are
not readily available, the Company’s own assumptions are set to reflect those that market participants would use in pricing
the asset or liability at the measurement date. The availability of valuation techniques and observable inputs can vary from investment
to investment and are affected by a wide variety of factors, including; type of investment, whether the investment is new and
not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the transaction.

To
the extent that valuation is based upon models or inputs that are less observable or unobservable in the market, the determination
of fair value requires more judgment. Because of the inherent uncertainty of valuation, those estimated values may be materially
higher or lower than the values that would have been used had a ready market for the investments existed. Accordingly, the degree
of judgment exercised by the Fund in determining fair value is greatest for investments categorized in Level 3. In certain cases,
the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in
the fair value hierarchy in which the fair value measurement falls in its entirety is determined based upon the lowest level input
that is significant to the fair value measurement.

Fair
Value - Valuation Techniques and Inputs

The
Company holds and may invest public securities traded on public exchanges or over-the-counter (OTC), private securities, real
estate, convertible securities, interest bearing securities and other types of securities and has adopted specific techniques
for their respective valuations.

Equity
Securities in Public Companies

Unrestricted

The
Company values investments in securities that are freely tradable and listed on major securities exchanges at their last reported
sales price as of the valuation date. To the extent these securities are actively traded and valuation adjustments are not applied,
they are categorized in Level 1 of the fair value hierarchy.

Securities
traded on inactive markets or valued by reference to similar instruments are generally categorized in Level 2 or 3 of the fair
value hierarchy.

Restricted

Securities
traded on public exchanges or over-the-counter (OTC) where there are formal restrictions that limit (i.e. Rule 144 holding periods
and underwriter’s lock-ups) their sale shall be valued at the closing price on the date of valuation less applicable discounts.
The Company may apply a discount to securities with Rule 144 restrictions. Additional discounts may be assessed if the Company
believes there are other mitigating factors which warrant the additional discounting. When determining potential additional discounts,
factors that will be taken into consideration include, but are not limited to; securities’ trading characteristics, volume,
length and overall impact of the restriction as well as other macro-economic factors. Valuations should be discounted appropriately
until the securities may be freely traded.

If
it has been determined that the exchange or OTC listed price does not accurately reflect fair market value, the Company may elect
to treat the security as a private company and apply an alternative valuation method.

F-9

Investments
in restricted securities of public companies may be included in Level 2 of the fair value hierarchy. However, to the extent that
significant inputs used to determine liquidity discounts are not observable, investments in restricted securities in public companies
may be categorized in Level 3 of the fair value hierarchy.

As
of the balance sheet dates, the estimated fair values of the financial instruments were not materially different from their carrying
values as presented on the balance sheet. This is primarily attributed to the short maturities of these instruments.

Effective
July 1, 2008, the Company adopted ASC 820 (previously SFAS 157), Fair Value Measurements and adopted this Statement for
the assets and liabilities shown in the table below. ASC 820 clarifies the definition of fair value, prescribes methods for measuring
fair value, establishes a fair value hierarchy based on the inputs used to measure fair value, and expands disclosures about the
use of fair value measurements. The adoption of ASC 820 did not have a material impact on our fair value measurements. ASC 820
permits the Company to defer the recognition and measurement of the nonfinancial assets and nonfinancial liabilities until January
1, 2010. At June 30, 2018, the Company did not have any nonfinancial assets or nonfinancial liabilities that are recognized or
disclosed at fair value. ASC 820 requires that financial assets and liabilities that are reported at fair value be categorized
as one of the types of investments based upon the methodology mentioned in Level 1, Level 2 and Level 3 above for determining
fair value.

Assets
measured at fair value on a recurring basis are summarized below. The Company also has convertible notes and derivative liabilities
as disclosed in this report that are measured at fair value on a regular basis until paid off or exercised.

The
Company uses various approaches to measure fair value of available-for-sale securities, while applying the three-level valuation
hierarchy for disclosures, specified in ASC 820. Our Level 1 securities were measured using the quoted prices in active markets
for identical assets and liabilities.

The
company’s policy regarding the transfers in and/or out of Level 3 depends on the trading activity of the security, the volatility
of the security, and other observable units which clearly represents the fair value of the security. If a level 3 security can
be measured using a more fairly represented fair value, we will transfer these securities either into Level 1 or Level 2, depending
on the type of inputs.

REVENUE
RECOGNITION STANDARDS

ASC
606-10 provides the following overview of how revenue is recognized from an entity’s contracts with customers: An entity
recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration
to which the entity expects to be entitled in exchange for those goods or services.

Step
1: Identify the contract(s) with a customer.

Step
2: Identify the performance obligations in the contract.

Step
3: Determine the transaction price – The transaction price is the amount of consideration in a contract to which an entity
expects to be entitled in exchange for transferring promised goods or services to a customer.

Step
4: Allocate the transaction price to the performance obligations in the contract – Any entity typically allocates the transaction
price to each performance obligation on the basis of the relative standalone selling prices of each distinct good or service promised
in the contract.

Step
5: Recognize revenue when (or as) the entity satisfies a performance obligation – An entity recognizes revenue when (or
as) it satisfies a performance obligation by transferring a promised good or service to a customer (which is when the customer
obtains control of that good or service).

The
amount of revenue recognized is the amount allocated to the satisfied performance obligation. A performance obligation may be
satisfied at a point in time (typically for promises to transfer goods to a customer) or over time (typically for promises to
transfer service to a customer). For performance obligations satisfied over time, an entity recognizes revenue over time by selecting
an appropriate method for measuring the entity’s progress toward complete satisfaction of that performance obligation. (Paragraphs
606-10 25-23 through 25-30).

F-10

In
addition, ASC 606-10 contains guidance on the disclosures related to revenue, and notes the following:

It
also includes a cohesive set of disclosure requirements that would result in an entity providing users of financial statements
with comprehensive information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from the entity’s
contracts with customers. Specifically, Section 606-10-50 requires an entity to provide information about:

-
Revenue recognized from contracts with customers, including disaggregation of revenue into appropriate categories.

-
Contract balances, including the opening and closing balances of receivables, contract assets, and contract liabilities.

-
Performance obligations, including when the entity typically satisfies its performance obligations and the transaction prices
is that is allocated to the remaining performance obligations in a contract.

-
Significant judgments, and changes in judgments, made in applying the requirements to those contracts.

Additionally,
Section 340-40-50 requires an entity to provide quantitative and/or qualitative information about assets recognized from the costs
to obtain or fulfill a contract with a customer.

The
Company’s revenue recognition policies are in compliance with ASC 606-10. The Company recognizes consulting and advisory
fee revenues in accordance with the above-mentioned guidelines and expenses are recognized in the period in which the corresponding
liability is incurred.

ADVERTISING

The
Company expenses advertising costs as incurred. Advertising costs for the years ended June 30, 2018 and 2017 were $36,221 and
$31,413, respectively. The increase in advertising expenses in the current year is primarily due to an increase of $4,808 in investor
relations expenses during the fiscal year ended June 30, 2018, as compared to the previous fiscal year.

COMPREHENSIVE
INCOME (LOSS)

ASC
220-10-45 (previously SFAS 130, Reporting Comprehensive Income) establishes standards for reporting and display of comprehensive
income, its components and accumulated balances. Comprehensive income is defined to include all changes in equity, except those
resulting from investments by owners and distributions to owners. Among other disclosures, SFAS No. 130 requires that all items
that are required to be recognized under current accounting standards as components of comprehensive income be reported in a financial
statement that is displayed with the same prominence as other financial statements. As of June 30, 2018 and 2017, respectively,
accumulated other comprehensive incomes of $751,962 and $153,474 are presented on the accompanying consolidated balance sheets.

INCOME
TAXES

The
Company accounts for income taxes in accordance with ASC 740 (previously SFAS No. 109, “Accounting for Income Taxes”).
Deferred taxes are provided on the liability method whereby deferred tax assets are recognized for deductible temporary differences,
and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between
the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when,
in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

REPORTING
OF SEGMENTS

ASC
280 (previously Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information),
which supersedes Statement of Financial Accounting Standards No. 14, Financial Reporting for Segments of a Business Enterprise,
establishes standards for the way that public enterprises report information about operating segments in annual financial statements
and requires reporting of selected information about operating segments in interim financial statements regarding products and
services, geographic areas and major customers. ASC 280 defines operating segments as components of an enterprise about which
separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how
to allocate resources and in assessing performance. The Company operated in two segments that generated revenues during the year
ended June 30, 2018 and one segment in the year ended June 30, 2017.

F-11

RISKS
AND UNCERTAINTIES

In
the normal course of business, the Company is subject to certain risks and uncertainties. The Company provides its service and
receives marketable securities upon execution of transactions. Consequently, the value of the securities received from customers
can be affected by economic fluctuations and each customer’s business growth. The actual realized value of these securities
could be significantly different than recorded value.

Modifications:
The following disclosure requirements were modified in Topic 820:

1.
In lieu of a rollforward for Level 3 fair value measurements, a nonpublic entity is required to disclose transfers into and out
of Level 3 of the fair value hierarchy and purchases and issues of Level 3 assets and liabilities.

2.
For investments in certain entities that calculate net asset value, an entity is required to disclose the timing of liquidation
of an investee’s assets and the date when restrictions from redemption might lapse only if the investee has communicated
the timing to the entity or announced the timing publicly.

3.
The amendments clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement
as of the reporting date.

Additions:
The following disclosure requirements were added to Topic 820; however, the disclosures are not required for nonpublic entities:

1.
The changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value
measurements held at the end of the reporting period.

2.
The range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For certain
unobservable inputs, an entity may disclose other quantitative information (such as the median or arithmetic average) in lieu
of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method
to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements.

The
amendments in this Update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning
after December 15, 2019.

Update
No. 2018-07 – June 2018

Compensation
– Stock Compensation (Topic 718)

Improvements
to Nonemployee Share-Based Payment Accounting

Main
Provisions: The amendments in this Update expand the scope of Topic 718 to include sharebased payment transactions for acquiring
goods and services from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific
guidance on inputs to an option pricing model and the attribution of cost (that is, the period of time over which share-based
payment awards vest and the pattern of cost recognition over that period). The amendments specify that Topic 718 applies to all
share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own
operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments
used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to
customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers.

F-12

The
amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2018, including
interim periods within that fiscal year.

The
transition provisions in ASC Topic 606 require that a public business entity and certain other specified entities adopt ASC Topic
606 for annual reporting 3 periods beginning after December 15, 2017, including interim reporting periods within that reporting
period. FN2 All other entities are required to adopt ASC Topic 606 for annual reporting periods beginning after December 15, 2018,
and interim reporting periods within annual reporting periods beginning after December 15, 2019.

The
core principle of the guidance in Topic 606 is that an entity should recognize revenue to depict the transfer of promised goods
or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for
those goods or services. To achieve that core principle, an entity should apply the following steps:

1.
Identify the contract(s) with a customer.

2.
Identify the performance obligations in the contract.

3.
Determine the transaction price.

4.
Allocate the transaction price to the performance obligations in the contract.

The
amendments in this Update do not change the core principle of the guidance in Topic 606. Rather, the amendments in this Update
clarify the following two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance,
while retaining the related principles for those areas.

The
Company
has
either
evaluated
or
is currently
evaluating
the
implications,
if
any,
of
each of
these pronouncements
and
the possible
impact they
may
have
on the
Company’s
financial
statements.
In most
cases, management
has determined
that
the
implementation
of these pronouncements would
not have
a material
impact
on
the
financial
statements
taken
as a
whole.

NOTE
3 – LOANS RECEIVABLE

Loans
receivable consist of the following at June 30, 2018 and 2017:

Loans
Receivable

June
30, 2018

June
30, 2017

Loan
to American Laser Healthcare, Inc.

$

1,605

$

-

Total

$

1,605

$

-

NOTE
4 – OTHER ASSETS

The
Other Assets comprise of the following as of June 30, 2018 and 2017:

2018

2017

Investments

$

25,005,000

$

-

Contract
Assets

$

697,841

$

-

Total
Other Assets

$

27,424,139

$

-

F-13

Investments
consist of a $5,000 investment in AQuarius Power, Inc., a renewable energy technology company, and a 51% ownership in twenty-one
mining claims over an area of approximately 400 acres in Granite Mining District, Grant County, Oregon, U.S.A., acquired by American
Pacific Resources, Inc., a subsidiary of the Company, in exchange for a total purchase price of twenty-five million U.S. Dollars
($US 25,000,000) paid in a combination of cash, convertible demand promissory note and PHI Group, Inc.’s Class A Series
II Convertible Cumulative Redeemable Preferred Stock. Contract assets consist of a balance of $697,841 from an agreement dated
March 27, 2018 with a client for the total amount of $2,000,000, of which $1,212,159 was received and recognized as revenue during
the fiscal year ended June 30, 2018.

NOTE
5 – MARKETABLE EQUITY SECURITIES AVAILABLE FOR SALE

The
Company’s marketable securities are classified as available-for-sale and, as such, are carried at fair value. All of the
securities are comprised of shares of common stock of the investee. Securities classified as available-for-sale may be sold in
response to changes in interest rates, liquidity needs, and for other purposes. Each investment in marketable securities represents
less than twenty percent (20%) of the outstanding common stock and stock equivalents of the investee, and each security is nationally
quoted on the National Association of Securities Dealers OTC Bulletin Board (“OTCBB”) or the OTC Markets. As such,
each investment is accounted for in accordance with the provisions of SFAS No. 115.

Marketable
securities owned by the Company and classified as available for sale as of June 30, 2018 consisted of 33,805,106 shares of Myson
Group, Inc. (formerly Vanguard Mining Corporation) and 292,050,000 shares of Sports Pouch Beverage Company, both public companies
traded on the a public company traded on the OTC Markets (Trading symbols MYSN and SPBV, respectively). The fair value of the
marketable securities recorded as of June 30, 2018 was $1,100,483.

Securities
available for sale

Level
1

Level
2

Level
3

Total

June
30, 2018

-

$

253,538

$

846,945

$

1,100,483

June
30, 2017

$

-

$

210,646

$

292,050

$

502,696

During
the fiscal year ended June 30, 2018, there was no transfer of securities from level 3 to level 2.

NOTE
6 – PROPERTY AND EQUIPMENT

During
the fiscal year ended June 30, 2017, the Company sold ten acres of land, Parcel Identification Numbers 09705010180 & 190,
in Suwannee County, Florida. As of June 30, 2018 the Company did not have any property or equipment, except 51% ownership in twenty-one
mining claims over an area of approximately 400 acres in Granite Mining District, Grant County, Oregon, U.S.A. owned by American
Pacific Resources, Inc., a subsidiary of the Company’s.

NOTE
7 – DISCONTINUED OPERATIONS

As
of June 30, 2012, the Company recognized the businesses of PHI Gold Corp. (formerly PHI Mining Corporation), Providential Vietnam
Ltd., PHI Energy Corp., and Philand Ranch Ltd., a United Kingdom corporation, together with its wholly-owned subsidiaries Philand
Corporation (USA), Philand Ranch Ltd. (Singapore) and Philand Vietnam Ltd. as discontinued operations for practical business and
accounting purposes. As of June 30, 2018, the Company had a balance of $1,255,037 as Long-term Liabilities from Discontinued Operations,
consisting of $954,337 from Philand Ranch Ltd., $215,000 from preferred stock of Providential Holdings, Inc., a former subsidiary
of the Company, and $85,700 in contingency liabilities.

NOTE
8 – CURRENT LIABILITIES

Current
liabilities of the Company consist of the followings as of June 30, 2018 and 2017:

June
30, 2018

June
30, 2017

Accounts
payable

$

116,063

$

159,875

Accrued
expenses

$

392,205

$

384,929

Short-term
notes payable

$

1,336,552

$

873,008

Due
to officers

$

233,577

$

592,141

Other
current payable

$

92,781

-

Contract
liabilities

$

697,841

-

Client
deposit

$

-

$

780

Derivative
liabilities

$

738,814

$

545,756

F-14

CURRENT
ACCRUED EXPENSES

Current
accrued expenses consist of $238,165 in accrued salaries and payroll tax liabilities, $149,359 in accrued interest from short-term
notes, and $4,681 in dividends payable from Class A Series II Preferred Stock.

Contract
liabilities consist of a balance of $697,841 as a result of an agreement dated March 27, 2018 with a client for the total amount
of $2,000,000, of which $1,212,159 was recognized as revenue and thus reducing the original contract liabilities by that same
amount during the fiscal year ended June 30, 2018.

Long-term
accrued interest expenses consist of accrued interest from notes payable in the amount of $2,005,815.

ADVANCES
FROM CUSTOMERS

The
Company recorded $288,219 as Advances from Customers to reserve for consulting fees previously received from a client while the
Company was not able to complete the consulting services due to the client’s inability to provide GAAP-compliant audited
financial statements in order to file a registration statement with the Securities and Exchange Commission.

DEMAND
PROMISSORY NOTE

The
Company issued a Demand Promissory Note in the amount of $24,310,400 to Rush Gold Royalty, Inc., a Wyoming corporation, in connection
with the acquisition of a 51% ownership in twenty-one mining claims over an area of approximately 400 acres in Granite Mining
District, Grant County, Oregon, U.S.A by American Pacific Resources, Inc., a subsidiary of the Company. As of June 30, 2018, the
balance of the convertible demand promissory note was $24,048,500.

LIABILTIES
FROM DISCONTINUED OPERATIONS

As
of June 30, 2012, the Company recognized the businesses of PHI Gold Corp. (formerly PHI Mining Corporation), Providential Vietnam
Ltd., PHI Energy Corp., and Philand Ranch Ltd., a United Kingdom corporation, together with its wholly-owned subsidiaries Philand
Corporation (USA), Philand Ranch Ltd. (Singapore) and Philand Vietnam Ltd. as discontinued operations for practical business and
accounting purposes. As of June 30, 2018, the Company carried balance of $ 1,040,037 as Long-term Liabilities for these discontinued
operations.

F-15

PREFERRED
STOCK LIABILITIES FROM DISCONTINUED OPERATIONS

As
of June 30, 2017, the Company re-classified $215,000 as Long-term Liabilities payable to holders of preferred stock of Providential
Securities, Inc., a previous subsidiary of the Company that was discontinued in the year 2000. In the early 2000’s, the
Company had made an offer for these preferred stockholders to receive shares of common stock in the Company in exchange for the
preferred shares in the discontinued subsidiary but only a small number of the preferred shareholders responded and accepted the
offer. In more recent years, the Company has also attempted to contact these preferred shareholders from time to time but have
not received further response from them. The Company has recorded the amount of $215,000 as Long-term Liability.

NOTE
10 - DUE TO OFFICERS AND DIRECTORS

Due
to officer, represents loans and advances made by officers and directors of the Company and its subsidiaries, unsecured and due
on demand. As of June 30, 2018 and 2017, the balances were $233,577 and $592,141, respectively.

Officers/Directors

June
30, 2018

June
30, 2017

Henry
Fahman

157,727

511,291

Tam
Bui

63,350

63,350

Frank
Hawkins

-

5,000

Lawrence
Olson

12,500

12,500

Total

$

233,577

$

592,141

NOTE
11 – LOANS AND PROMISSORY NOTES

SHORT
TERM NOTES PAYABLE:

In
the course of its business, the Company has obtained short-term loans from individuals and institutional investors and from time
to time raised money by issuing restricted common stock of the Company under the auspices of Rule 144. As of June 30, 2018, the
Company had $803,310 in short-term notes payable with $2,133,947 accrued and unpaid interest. These notes bear interest rates
ranging from 0% to 36% per annum.

CONVERTIBLE
PROMISSORY NOTES:

During
the fiscal year ended June 30, 2018, the Company issued the following convertible promissory notes to various private investment
funds:

On
July 20, 2017, the Company issued a new convertible promissory note to Power Up Lending Group for $28,000, with an interest rate
of 8% and convertible to Common Stock of the Company at 42% discount. On January 18, 2018, the Company paid a total of $43,610.96
to Power Up Lending Group, which amount included the principal, prepayment premium and accrued interest. This note was paid off
in full as of January 18, 2018.

On
August 3, 2017, the Company issued a new convertible promissory note to JSJ Investments, Inc. for $78,750, with an interest rate
of 10% and convertible to Common Stock of the Company at 45% discount. On January 30, 2018, the Company paid a total of $117,984.76
to JSJ Investments, Inc., which amount included the principal amount of $78,750, prepayment premium of $35,437.50 and accrued
and unpaid interest of $3,797.26. This note was paid off in full as of January 30, 2018.

On
August 15, 2017, the Company issued a new convertible promissory note to Power Up Lending Group for $33,000, with an interest
rate of 10% and convertible to Common Stock of the Company at 42% discount. On February 5, 2018, the Company paid a total of $51,300.99
to Power Up Lending Group, which amount included the principal, prepayment premium and accrued interest. This note was paid off
in full as of February 5, 2018.

F-16

On
August 24, 2017, the Company issued a new convertible promissory note to LG Capital for $78,750, with an interest rate of 8% and
convertible to Common Stock of the Company at 50% discount. On February 20, 2018, the Company paid a total of $122,655.82 to LG
Capital, which amount included the principal, prepayment premium and accrued interest. This note was paid off in full as of February
20, 2018.

On
October 18, 2017, the Company issued a new convertible promissory note to Power Up Lending Group for $53,000, with an interest
rate of 8% and convertible to Common Stock of the Company at 42% discount to the average of the two lowest trading prices or closing
bids during the ten trading days immediately prior to the date of conversion. The maturity date of this note is 7/20/2018. On
April 17, 2018, the Company made a payment in the amount of $25,000.00, consisting of $16,666.67 of principal and $8,333.33 of
prepayment premium, to Power Up Lending Group. The principal balance due remaining under this Note after this payment was $36,333.33.
On April 19, 2018, the Company issued 1,169,591 shares of free-trading Common Stock of PHI Group, Inc. to Power Up Lending Group
for the conversion of $20,000.00 of the principal amount of the Note. The principal amount of the Note remaining after this conversion
was $16,333.33. On April 23, 2018, the Company issued 1,127,820 shares of free-trading Common Stock of PHI Group, Inc. to Power
Up Lending Group for the conversion of $15,000.00 of the principal amount of the Note. The principal amount of the Note remaining
after this conversion was $1,333.33. On April 24, 2018, the Company issued 295,156 shares of free-trading Common Stock of PHI
Group, Inc. to Power Up Lending for the conversion of $1,333,33 of the principal amount of the Note together with $2,120 of accrued
and unpaid interest thereto, totaling $3,453.33. The principal amount of the Note remaining after this conversion was $0.00.

On
October 26, 2017, the Company issued a new convertible promissory note to Crown Bridge Partners, LLC for $35,000, with an interest
rate of 5% and convertible to Common Stock of the Company at 50% discount to the average of the two lowest trading prices or closing
bids during the twenty trading days immediately prior to the date of conversion. The maturity date of this note is 10/26/2018.
In connection with this note, the Company issued 87,500 warrants to Crown Bridge Partners, LLC for the purchase of Common Stock
of the Company at the exercise price of $0.40 per share. The exercise period commences on the issuance date and ends on the one-year
anniversary thereof. On May 29, 2018, the Company issued 3,159,521 shares of free-trading Common Stock of PHI Group, Inc. to Crown
Bridge Partners for the conversion of the principal, $992.47 of accrued interest and $500.00 of fees under the Note, totaling
$36,492.47. The principal balance due remaining under this Note after this conversion was $0.00.

On
November 24, 2017, the Company issued a new convertible promissory note to Einstein Investments LLC for $115,500, with an interest
rate of 10% and convertible to Common Stock of the Company at 50% discount to the average of the two lowest trading prices or
closing bids during the ten trading days immediately prior to the date of conversion. The maturity date of this note is 10/26/2018.
On June 04, 2018, the Company issued 3,149,607 shares of free-trading Common Stock of PHI Group, Inc. to Einstein Investments,
LLC for the conversion of $44,050.96 principal amount together with $5,949.04 accrued interest under the Note, totaling $50,000.
The principal balance due remaining under this Note after this conversion was $71,449.04.

On
January 18, 2018, the Company issued a new convertible promissory note to JSJ Investments, Inc. for $78,750, with an interest
rate of 10% and convertible to Common Stock of the Company at 45% discount to the average of the three lowest trading prices or
closing bids during the twenty trading days immediately prior to the date of conversion. The maturity date of this note is 01/18/2019.

On
January 18, 2018, the Company issued a new convertible promissory note to Power Up Lending Group for $33,000, with an interest
rate of 8% and convertible to Common Stock of the Company at 42% discount to the average of the two lowest trading prices or closing
bids during the ten trading days immediately prior to the date of conversion. The maturity date of this note is 10/10/2018.

On
January 26, 2018, the Company issued a new convertible promissory note to Power Up Lending Group for $33,000, with an interest
rate of 8% and convertible to Common Stock of the Company at 42% discount to the average of the two lowest trading prices or closing
bids during the ten trading days immediately prior to the date of conversion. The maturity date of this note is 11/15/2018.

F-17

On
January 31, 2018, the Company issued a new convertible promissory note to JSJ Investments, Inc. for $78,750, with an interest
rate of 10% and convertible to Common Stock of the Company at 45% discount to the average of the three lowest trading prices or
closing bids during the twenty trading days immediately prior to the date of conversion. The maturity date of this note is 01/18/2019.

On
January 31, 2018, the Company issued a new convertible promissory note to Crown Bridge Partners, LLC for $50,000, with an interest
rate of 5% and convertible to Common Stock of the Company at 50% discount to the average of the two lowest trading prices or closing
bids during the twenty trading days immediately prior to the date of conversion. The maturity date of this note is 01/31/2019.

On
February 01, 2018, the Company issued a new convertible promissory note to Adar Bays for $60,000, with an interest rate of 6%
and convertible to Common Stock of the Company at 50% discount to the average of the two lowest trading prices during the twenty
five trading days immediately prior to the date of conversion. The maturity date of this note is 02/01/2019.

On
February 02, 2018, the Company issued a new convertible promissory note to Auctus Fund LLC for $75,000, with an interest rate
of 12% and convertible to Common Stock of the Company at 50% discount to the average of the two lowest trading prices during the
twenty five trading days immediately prior to the date of conversion. The maturity date of this note is 11/02/2018.

On
February 22, 2018, the Company issued a new convertible promissory note to Power Up Lending Group for $33,000, with an interest
rate of 8% and convertible to Common Stock of the Company at 42% discount to the average of the two lowest trading prices or closing
bids during the ten trading days immediately prior to the date of conversion. The maturity date of this note is 11/30/2018.

On
March 21, 2018, the Company issued a new convertible promissory note to JSJ Investments, Inc. for $78,750, with an interest rate
of 10% and convertible to Common Stock of the Company at 45% discount to the average of the three lowest trading prices or closing
bids during the twenty trading days immediately prior to the date of conversion. The maturity date of this note is 03/21/2019.

On
April 2, 2018, the Company issued a new convertible promissory note to Crown Bridge Partners, LLC for $55,000, with an interest
rate of 10% and convertible to Common Stock of the Company at 50% discount to the average of the two lowest trading prices or
closing bids during the twenty trading days immediately prior to the date of conversion. The maturity date of this note is 04/02/2019.

On
April 10, 2018, the Company issued a new convertible promissory note to Power Up Lending Group for $33,000, with an interest rate
of 8% and convertible to Common Stock of the Company at 42% discount to the average of the two lowest trading prices or closing
bids during the ten trading days immediately prior to the date of conversion. The maturity date of this note is 01/30/2019.

On
June 12, 2018, the Company issued a new convertible promissory note to Crown Bridge Partners, LLC for $55,000, with an interest
rate of 10% and convertible to Common Stock of the Company at 50% discount to the average of the two lowest trading prices or
closing bids during the twenty trading days immediately prior to the date of conversion. The maturity date of this note is 06/12/2019.

On
June 25, 2018, the Company issued a new convertible promissory note to JSJ Investments, Inc. for $100,000, with an interest rate
of 10% and convertible to Common Stock of the Company at 45% discount to the average of the three lowest trading prices or closing
bids during the twenty trading days immediately prior to the date of conversion. The maturity date of this note is 06/25/2019.

F-18

As
of June 30, 2018, the principal balance of the outstanding convertible notes was $834,699, with a total discount of $301,457,
accrued interest of $21,227 and total derivative liabilities of $738,814. The Company relies on professional third-party valuation
to record the value of derivative liabilities, discounts, and changes in fair value of derivatives in connection with these convertible
notes and warrants, if any, that are related to the convertible notes. The Company intends to repay these notes in cash as much
as practical.

This
case was originally submitted to Orange County Superior Court, CA on June 25, 1997, Case No. 781121, and subsequently moved to
NASD Dispute resolution for arbitration. On or about August 24, 2000, the Company’s legal counsel negotiated with the Claimant’s
counsel and unilaterally reached a settlement that had not been approved by the Company. While the Company was in the process
of re-negotiating the terms of said settlement, the Claimants filed a request for arbitration hearing before the National Association
of Securities Dealers on October 4, 2000, Case No. 99-03160. Thereafter, the Claimants filed a complaint with the Orange County
Superior Court, CA on October 31, 2000, Case No. 00CC13067 for alleged breach of contract for damages in the sum of $75,000 plus
pre-judgment interest, costs incurred in connection with the complaint, and other relief. Without admitting or denying any allegations,
the Company reached a settlement agreement with the Claimants whereby the Company would pay the Claimants a total of $62,500 plus
$4,500 in administrative costs. As the date of this report, the Company has paid $2,500 and is subject to an entry of judgment
for $79,000. In May 2011, the Claimants filed an application for and renewal of judgment for a total of $140,490.78. As of June
30, 2018 the Company accrued $172,091 for potential liabilities in connection with this case in the accompanying consolidated
financial statements.

WILLIAM
DAVIDSON VS. DOAN ET AL.

On
or about February 01, 2010, the company was notified of a suit that was filed with the Superior Court of the State of California
for the County of Los Angeles on November 24, 2009 by William Davidson, an individual against Martin Doan, Henry Fahman, Benjamin
Tran, HRCiti Corporation, and Providential Capital, Inc. (collectively referred to as “Defendants” - Case No. BC 426831).
Plaintiff demanded an amount of not less than $140,000.00 from Defendants for promissory notes outstanding between Plaintiff and
the company.

On
July 09, 2012 William Davidson and PHI Capital Holdings, Inc. (formerly Providential Capital, Inc.), a subsidiary of the Company,
reached a settlement agreement with respect to whereby PHI Capital agreed to pay William Davidson a total of $200,000 over a period
of nineteen months beginning September 1, 2012. Since November 30, 2012, William Davidson has converted portions of the total
amount into common stock of PHI Group, Inc. in lieu of cash payment. The Company has accrued $90,000 as the required liability
associated with the balance of these notes in the accompanying consolidated financial statements as of June 30, 2018.

NOTE
13 – PAYROLL TAX LIABILITIES

The
payroll liabilities are accrued and recorded as accrued expenses in the consolidated balance sheet. During the fiscal year ended
June 30, 2014, the Company paid $41,974.22 to the Internal Revenue Service and $ 19,289.94 to the State of California Employment
Development Department towards the balance of $118,399 of payroll tax, penalties and interest claimed by these agencies. The Company
has not resolved the remaining balances with the Internal Revenue Service and the State of California Employment Department as
of June 30, 2018.

F-19

NOTE
14 – BASIC AND DILUTED NET LOSS PER SHARE

Net
loss per share is calculated in accordance with SFAS No. 128, “Earnings per Share”. Under the provision of SFAS No.
128, basic net loss per share is computed by dividing the net loss for the period by the weighted-average number of common shares
outstanding for the period. Diluted EPS is based on the weighted-average number of shares of common stock outstanding for the
period and common stock equivalents outstanding at the end of the period. Basic and diluted weighted average numbers of shares
for the year ended June 30, 2018 were the same since the inclusion of Common stock equivalents is anti-dilutive.

NOTE
15 – STOCKHOLDER’S EQUITY

As
of June 30, 2018, the total number of authorized capital stock of the Company was 2,000,000,000 shares with a par value of $0.001
per share, consisting of 1,900,000,000 shares of voting Common Stock with a par value of $0.001 per share and 100,000,000 shares
of Preferred Stock with a par value of $0.001 per share. The rights and terms associated with the Preferred Stock will be determined
by the Board of Directors of the Company.

Treasury
Stock

The
balance of treasury stock as of June 30, 2018 was 487,767 shares valued at $44,170 based on cost basis.

Common
Stock

During
the fiscal year ended June 30, 2018, the Company has issued the following amounts of its Common Stock:

On
July 05, 2017, the Company issued 740,741 shares of free-trading Common Stock of PHI Group, Inc. to Power Up Lending Group Ltd.,
holder of a Convertible Promissory Note dated 12/15/2016 of the Company, for the conversion of $10,000.00 of the principal amount
of the Note, at the conversion price of $0.0135 per share. The principal amount of the Note after this conversion was $14,500.00.

On
July 11, 2017, the Company issued 800,000 shares of free-trading Common Stock of PHI Group, Inc. to Auctus Fund LLC, holder of
a Convertible Promissory Note dated 8/16/2016 of the Company, for the conversion of $5,152.00, consisting of $3,485.17 principal
amount of the Note and $1,666.83 of accrued and unpaid interest thereto, at the conversion price of $0.00644 per share. The principal
amount of the Note after this conversion was $32,613.12. Subsequently, on July 24, 2017, the Company paid a total of $49,530.72
to Auctus Fund LLC, consisting of $32,613.12 principal amount and the balance in pre-payment premium and accrued and unpaid interest
in connection with the Convertible Promissory Note dated 8/16/16. This note was paid in full and the principal balance due remaining
and accrued and unpaid interest remaining after this payment was $0.00.

On
July 17, 2017, the Company issued 880,000 shares of free-trading Common Stock of PHI Group, Inc. to Power Up Lending Group Ltd.,
holder of a Convertible Promissory Note dated 12/15/2016 of the Company, for the conversion of $7,920.00 of the principal amount
of the Note, at the conversion price of $0.009 per share. The principal amount of the Note after this conversion was $6,580.

On
July 21, 2017, the Company issued 1,019,872 shares of free-trading Common Stock of PHI Group, Inc. to Power Up Lending Group Ltd.,
holder of a Convertible Promissory Note dated 12/15/2016 of the Company, for the conversion of $7,955.00, consisting of $6,580
principal amount of the Note and $1,375.00 of accrued and unpaid interest thereto, at the conversion price of $0.0078 per share.
The principal balance due remaining and accrued and unpaid interest remaining after this conversion was $0.00.

On
July 25, 2017, Henry Fahman, Chairman and Chief Executive Officer of the Company, converted $300,000 of indebtedness owed by the
Company into 20,000,000 shares of restricted common stock of PHI Group, Inc. at the conversion price of $0.015 per share. The
conversion into restricted common stock of the Company was effectuated pursuant to the resolutions of the Company’s Board
of Directors dated March 12, 2012, June 06, 2012, and November 2, 2012 which remain in full force and effect, allowing creditors
of the Company to convert any or all of their outstanding indebtedness and accrued and unpaid interest thereof into shares of
common stock of PHI Group, Inc. by relying on the exemption from the registration requirements of the United States Securities
Act of 1933, as amended (the “Act”).

F-20

On
July 25, 2017, the Company issued a total of 1,533,333 shares of restricted Common Stock of PHI Group, Inc. pursuant to Rule 144
to two non-US shareholders in connection with private stock purchase agreements dated July 19, 2017 and July 20, 2017, respectively,
between these shareholders and the Company, for a total of $23,000.00, at the purchase price of $0.015 per share.

On
October 17, 2017, the Company issued 434,783 shares of free–trading Common Stock of PHI Group, Inc. to Power Up Lending
Group Ltd., holder of a Convertible Promissory Note dated April 12, 2017 of the Company, for the conversion of $12,000.00 of the
principal amount of the Note.

On
October 19, 2017, the Company issued 371,057 shares of free–trading Common Stock of PHI Group, Inc. to JSJ Investments,
Inc., holder of a Convertible Promissory Note dated February 2, 2017 of the Company, for the conversion of $10,000.00 of the principal
balance of the Note.

On
October 23, 2017, the Company issued 622,407 shares of free–trading Common Stock of PHI Group, Inc. to Power Up Lending
Group Ltd., holder of a Convertible Promissory Note dated April 12, 2017 of the Company, for the conversion of $15,000.00 principal
balance of the Note.

On
October 24, 2017, the Company issued 250,000 shares of free–trading Common Stock of PHI Group, Inc. to EMA Financial LLC.,
holder of a Convertible Promissory Note dated April 04, 2017 of the Company, for the conversion of $3,587.50 of the principal
amount of the Note, less $750.00 of applicable fees under the Note.

On
October 31, 2017, the Company issued 419,212 shares of free–trading Common Stock of PHI Group, Inc. to Power Up Lending
Group Ltd., holder of a Convertible Promissory Note dated April 12, 2017 of the Company, for the conversion of $6,500.00 of the
remaining principal amount of the Note together with $2,010.00 of accrued and unpaid interest thereto, totaling $8,510.00.

On
November 7, 2017, the Company issued 600,000 shares of free–trading Common Stock of PHI Group, Inc. to EMA Financial LLC,
holder of a Convertible Promissory Note dated April 04, 2017 of the Company, for the conversion of $3,750.00 of the principal
balance of the Note, less $1,350.00 of applicable fees under the Note.

On
November 8, 2017, the Company issued 2,154,700 shares of free–trading Common Stock of PHI Group, Inc. to Auctus Fund, LLC,
holder of a Convertible Promissory Note dated March 3, 2017 of the Company, for the conversion of $17,852.43 of the principal
balance of the Note together with $3,356.17 of accrued and unpaid interest thereto and $500.00 applicable fee, totaling $21,708.60.

On
November 16, 2017, the Company issued 80,000 shares of restricted Common Stock of PHI Group, Inc. to Andreas Held, a current shareholder
of the Company, for $1,920 in cash under the auspices of Rule 144 pursuant to a Private Stock Purchase Agreement dated November
14, 2017.

On
November 21, 2017, the Company issued 1,000,000 shares of free–trading Common Stock of PHI Group, Inc. to EMA Financial
LLC, holder of a Convertible Promissory Note dated April 04, 2017 of the Company, for the conversion of $5,950.00 of the principal
balance of the Note, less $1,050.00 of applicable fees under the Note.

On
December 01, 2017, the Company issued 2,346,000 shares of free–trading Common Stock of PHI Group, Inc. to Auctus Fund, LLC,
holder of a Convertible Promissory Note dated March 3, 2017 of the Company, for the conversion of $15,062.55 of the principal
balance of the Note together with $202.57 of accrued and unpaid interest thereto and $500.00 applicable fee, totaling $15,765.12.

F-21

On
December 05, 2017, the Company issued 1,385,677 shares of free–trading Common Stock of PHI Group, Inc. to JSJ Investments,
Inc., holder of a Convertible Promissory Note dated February 2, 2017 of the Company, for the conversion of $11,000.00 of the principal
balance of the Note together with $1,651.23 of accrued and unpaid interest thereto, totaling $12,651.23.

On
December 12, 2017, the Company issued 2,000,000 shares of free–trading Common Stock of PHI Group, Inc. to EMA Financial
LLC, holder of a Convertible Promissory Note dated April 04, 2017 of the Company, for the conversion of $7,140.00 of the principal
balance of the Note, less $1,050.00 of applicable fees under the Note.

On
December 13, 2017, the Company issued 2,250,821 shares of free–trading Common Stock of PHI Group, Inc. to JSJ Investments,
Inc., holder of the $40,000 Convertible Promissory Note dated April 5, 2017 of the Company, for the conversion of $12,420.75 of
the principal balance of the Note.

On
December 14, 2017, the Company issued 2,744,300 shares of free–trading Common Stock of PHI Group, Inc. to Auctus Fund, LLC,
holder of a Convertible Promissory Note dated March 3, 2017 of the Company, for the conversion of $10,339.52 of the principal
balance of the Note together with $137.68 of accrued and unpaid interest thereto and $500.00 applicable fee, totaling $10,977.20.

On
December 14, 2017, the Company issued 1,724,138 shares of restricted Common Stock of PHI Group, Inc. to Steve Truong for $20,000
in cash under the auspices of Rule 144 pursuant to a Private Stock Purchase Agreement dated December 14, 2017.

On
December 19, 2017, the Company issued 2,500,000 shares of free–trading Common Stock of PHI Group, Inc. to EMA Financial
LLC, holder of a Convertible Promissory Note dated April 04, 2017 of the Company, for the conversion of $8,750.00 of the principal
balance of the Note, less $1,050.00 of applicable fees under the Note.

On
December 20, 2017, the Company issued 2,913,837 shares of free–trading Common Stock of PHI Group, Inc. to JSJ Investments,
Inc., holder of the $40,000 Convertible Promissory Note dated April 5, 2017 of the Company, for the conversion of $16,079.47 of
the principal balance of the Note.

On
December 29, 2017, the Company issued 2,300,000 shares of free–trading Common Stock of PHI Group, Inc. to Crown Bridge Partners,
LLC., holder of the $35,000.00 Convertible Promissory Note dated June 9, 2017 of the Company, for the conversion of $7,550.00
of the principal and $500.00 of fees under the Note totaling $8,050.00.

On
December 29, 2017, the Company issued 2,500,000 shares of free–trading Common Stock of PHI Group, Inc. to EMA Financial
LLC, holder of a Convertible Promissory Note dated April 04, 2017 of the Company, for the conversion of $8,750.00 of the principal
balance of the Note, less $1,050.00 of applicable fees under the Note.

On
January 08, 2018, the Company issued 1,835,795 shares of free-trading Common Stock of PHI Group, Inc. to Auctus Fund, LLC, holder
of a Convertible Promissory Note dated March 03, 2017 of the Company, for the conversion of $6,745.50 of the principal balance
of the Note, $97.68 of accrued and unpaid interest and $500.00 conversion fee under the Note totaling $7,343.18. The principal
balance due remaining under this Note after this conversion was $0.00.

On
January 09, 2018, the Company issued 2,601,957 shares of free-trading Common Stock of PHI Group, Inc. to JSJ Investments, Inc.,
holder of a Convertible Promissory Note dated April 05, 2017 of the Company, for the conversion of $11,499.78 of the principal
balance and accrued and unpaid interest of $2,858.64 totaling $14,358.42. The principal balance due remaining under this Note
after this conversion was $0.00.

On
January 11, 2018, the Company issued 2,900,000 shares of free-trading Common Stock of PHI Group, Inc. to Crown Bridge Partners,
LLC., holder of the $35,000.00 Convertible Promissory Note dated June 9, 2017 of the Company, for the conversion of $9,650.00
of the principal and $500.00 of fees under the Note totaling $10,150.00. The principal balance due remaining under this Note after
this conversion was $17,800.00.

F-22

On
January 25, 2018, the Company issued 2,500,000 shares of free-trading Common Stock of PHI Group, Inc. to EMA Financial LLC, holder
of a Convertible Promissory Note dated April 4, 2017 of the Company, for the conversion of $9,625.00 of the principal balance
of the Note, less $1,050 of conversion fees under the Note. The principal balance due remaining under this Note after this conversion
is $9,977.50

On
January 29, 2018, the Company issued 3,812,188 shares of free-trading Common Stock of PHI Group, Inc. to EMA Financial LLC, holder
of a Convertible Promissory Note dated April 4, 2017 of the Company, for the conversion of $9,975.50 of the principal balance
of the Note, $3,649.43 of accrued and unpaid interest, and $1,050 for legal and transfer agent fees for conversion, totaling $14,467.93.
This Note was paid off in full as of January 29, 2018; the principal balance due remaining under this Note after this conversion
is $0.00.

On
January 29, 2018, the Company issued 2,500,000 shares of free-trading Common Stock of PHI Group, Inc. to Crown Bridge Partners,
LLC., holder of the $35,000.00 Convertible Promissory Note dated June 9, 2017 of the Company, for the conversion of $9,562.50
of the principal and $500.00 of fees under the Note, totaling $10,062.50. The principal balance due remaining under this Note
after this conversion was $8,237.50.

On
January 30, 2018, the Company issued 100,000 shares of PHI Group, Inc.’s restricted common stock to Andreas Held, a long-term
shareholder of PHI Group, Inc.’s, for $981.00 in cash.

On
January 30, 2018, the Company issued 100,000 shares of PHI Group, Inc.’s restricted common stock to Cuong Tran, an independent
consultant, for technical consulting service.

On
February 8, 2018, the Company issued 2,509,693 shares of free-trading Common Stock of PHI Group, Inc. to Crown Bridge Partners,
LLC., holder of the $35,000.00 Convertible Promissory Note dated June 9, 2017 of the Company, for the conversion of $8,237.50
of principal, $1,012.66 of accrued interest, and $500.00 of fees under the Note, totaling $9,750.16. The principal balance due
remaining under this Note after this conversion was $0.00.

On
February 8, 2018, Henry Fahman, the Company’s Chief Executive Officer and Chief Financial Officer, converted $150,000.00
of the accrued and unpaid salary for the fiscal year ended June 30, 2011 into 4,746,084 shares of Restricted Common Stock of PHI
Group, Inc. at the effective price of $0.031605 per share, pursuant to the Company’s corporate resolutions dated November
2, 2012, which still remain in full force and effect.

On
February 8, 2018, Tina Phan, the Company’s Corporate Secretary and Treasurer, converted $60,000.00 of the accrued and unpaid
salary for the fiscal year ended June 30, 2011 into 1,898,434 shares of Restricted Common Stock of PHI Group, Inc. at the effective
price of $0.031605 per share, pursuant to the Company’s corporate resolutions dated November 2, 2012, which still remain
in full force and effect.

On
February 28, 2018, the Company issued 4,744,007 shares of free-trading Common Stock of PHI Group, Inc. to Crown Bridge Partners,
LLC., holder of the Common Stock Purchase Warrant dated as of June 9, 2017 in connection with the $35,000.00 Convertible Promissory
Note of June 9, 2017 by the Company, for the cashless exercise of $17,300.00 value of warrants. The total warrant value remaining
after this exercise was $17,700.00.

On
April 13, 2018, the Company issued 4,653,954 shares of free-trading Common Stock of PHI Group, Inc. to Crown Bridge Partners,
LLC., holder of the Common Stock Purchase Warrant dated June 9, 2017 in connection with the $35,000.00 Convertible Promissory
Note of June 9, 2017 by the Company, for the cashless exercise of $17,700.00 value of warrants. The total warrant value remaining
after this exercise was $0.00.

On
April 19, 2018, the Company issued 1,169,591 shares of free-trading Common Stock of PHI Group, Inc. to Power Up Lending Group
Ltd., holder of a Convertible Promissory Note dated as of 10/18/2017 by the Company, for the conversion of $20,000.00 of the principal
amount of the Note, at the conversion price of $0.0171 per share. The principal amount of the Note remaining after this conversion
was $16,333.33.

F-23

On
April 23, 2018, the Company issued 1,127,820 shares of free-trading Common Stock of PHI Group, Inc. to Power Up Lending Group
Ltd., holder of a Convertible Promissory Note dated as of 10/18/2017 by the Company, for the conversion of $15,000.00 of the principal
amount of the Note, at the conversion price of $0.0133 per share. The principal amount of the Note remaining after this conversion
was $1,333.33.

On
April 24, 2018, the Company issued 295,156 shares of free-trading Common Stock of PHI Group, Inc. to Power Up Lending Group Ltd.,
holder of a Convertible Promissory Note dated as of 10/18/2017 by the Company, for the conversion of $1,333,33 of the principal
amount of the Note together with $2,120 of accrued and unpaid interest thereto, totaling $3,453.33, at the conversion price of
$0.0117 per share. The principal amount of the Note remaining after this conversion was $0.00.

On
April 27, 2018, Tina Phan, the Company’s Corporate Secretary and Treasurer, converted $120,000.00 of the accrued and unpaid
salaries for the fiscal years ended June 30, 2012 and June 30, 2013 into 4,629,630 shares of Restricted Common Stock of PHI Group,
Inc. at the effective price of $0.02592 per share, pursuant to the Company’s corporate resolutions dated November 2, 2012,
which still remain in full force and effect.

On
April 27, 2018, Henry Fahman, the Company’s Chief Executive Officer and Chief Financial Officer, converted $300,000.00 of
the accrued and unpaid salaries for the fiscal years ended June 30, 2012 and June 30, 2013 into 11,574,074 shares of Restricted
Common Stock of PHI Group, Inc. at the effective price of $0.02592 per share, pursuant to the Company’s corporate resolutions
dated November 2, 2012, which still remain in full force and effect.

On
May 29, 2018, the Company issued 3,159,521 shares of free-trading Common Stock of PHI Group, Inc. to Crown Bridge Partners, LLC.,
holder of the $35,000.00 Convertible Promissory Note dated October 26, 2017 of the Company, for the conversion of the principal,
$992.47 of accrued interest and $500.00 of fees under the Note, totaling $36,492.47. The principal balance due remaining under
this Note after this conversion was $0.00.

On
June 04, 2018, the Company issued 3,149,607 shares of free-trading Common Stock of PHI Group, Inc. to Einstein Investments, LLC,
holder of the $115,000 Convertible Promissory Note dated November 24, 2017 of the Company, for the conversion of $44,050.96 principal
amount together with $5,949.04 accrued interest under the Note, totaling $50,000. The principal balance due remaining under this
Note after this conversion was $71,449.04.

On
June 21, 2018, the Company issued 6,048,786 shares of free-trading Common Stock of PHI Group, Inc. to Crown Bridge Partners, LLC.,
holder of the Common Stock Purchase Warrant dated as of October 26, 2017 in connection with the $35,000.00 Convertible Promissory
Note of October 26, 2017 by the Company, for the cashless exercise of $22,285.00 value of warrants. The total warrant value remaining
after this exercise was $12,715.00.

On
June 26, 2018, the Company issued 157,604 shares of free-trading Common Stock of PHI Group, Inc. to Buu Chung, holder of the convertible
promissory note dated 4/14/2005 of the Company, for the conversion of $3,000 principal amount. The principal balance due remaining
under this Note after this conversion was $0.00.

As
of June 30, 2018, there were 135,893,815 shares of the Company’s common stock issued and outstanding, excluding 5,673,327
shares of common stock that have been set aside for a special dividend distribution.

Preferred
Stock

The
Company has filed Certificates of Designation and Amendments to Certificate of Designation with the Nevada Secretary of State
to designate the Company’s authorized Preferred Stock as follows:

Class
A Preferred Stock

I.
DESIGNATIONS, AMOUNTS AND DIVIDENDS

1.
Class A Series I Cumulative Convertible Redeemable Preferred Stock

F-24

A.
Designation: The designation of the first twenty million (20,000,000) shares of the previously authorized 100,000,000 shares of
Preferred Stock, with a par value of $0.001 per share, shall be Class A Series I Cumulative Convertible Redeemable Preferred Stock.

B.
Number of Shares: The number of shares of Class A Series I Preferred Stock authorized shall be twenty million (20,000,000) shares.

C.
Dividends: Each holder of Class A Series I Preferred Stock is entitled to receive ten percent (10%) non-compounding cumulative
dividends per annum, payable semi-annually.

A.
Designation. The designation of the next twenty-five million (25,000,000) shares of the previously authorized 100,000,000 shares
of Preferred Stock, with a par value of $0.001 per share, shall be Class A Series II Cumulative Convertible Redeemable Preferred
Stock (the “Class A Series II Preferred Stock”).

B.
Number of Shares. The number of shares of Class A Series II Preferred Stock authorized shall be twenty-five million (25,000,000)
shares.

A.
Designation. The designation of the next fifty million (50,000,000) shares of the previously authorized 100,000,000 shares of
Preferred Stock, with a par value of $0.001 per share, shall be Class A Series III Cumulative Convertible Redeemable Preferred
Stock (the “Class A Series III Preferred Stock ”).

B.
Number of Shares. The number of shares of Class A Series III Preferred Stock authorized shall be fifty million (50,000,000) shares.

1.
Conversion of Series I and/or Series II Class A Preferred Stock into Common Stock of PHI Group, Inc.

Each
share of the Class A Preferred Stock, either Series I or Series II shall be convertible into the Company’s Common Stock
any time after two years from the date of issuance at a Variable Conversion Price (as defined herein) of the Common Stock. The
“Variable Conversion Price” shall mean 75% multiplied by the Market Price (as defined herein) (representing a discount
rate of 25%). “Market Price” means the average Trading Price for the Company’s Common Stock during the ten (10)
trading-day period ending one trading day prior to the date the Conversion Notice is sent by the Holder of the Class A Preferred
Stock to the Company via facsimile or email (the “Conversion Date”). “Trading Price” means, for any security
as of any date, the closing price on the OTC Markets, OTCQB, NASDAQ Stock Markets, or applicable trading market as reported by
a reliable reporting service (“Reporting Service”) mutually acceptable to the Company and Holder of the Class A Preferred
Stock.

2.
Conversion of Series I and/or Series II Class A Preferred Stock into Common Stock of a subsidiary of PHI Group, Inc.’s.

Alternatively,
each share of the Class A Preferred Stock, either Series I or Series II, may be convertible into Common Stock of a subsidiary
of PHI Group, Inc.’s, to be determined by the Company’s Board of Directors, any time after such subsidiary has become
a fully-reporting publicly traded company for at least three months, at a Variable Conversion Price (as defined herein). The Variable
Conversion Price to be used in connection with the conversion into Common Stock of a subsidiary of PHI Group, Inc.’s shall
mean 50% multiplied by the Market Price (as defined herein), representing a discount rate of 50%, of that Common Stock. “Market
Price” means the average Trading Price for the Common Stock of said subsidiary of PHI Group, Inc.’s during the ten
(10) trading-day period ending one trading day prior to the date the Conversion Notice is sent by the Holder of the Preferred
Stock to the Company via facsimile or email (the “Conversion Date”). “Trading Price” means, for any security
as of any date, the closing price on the OTC Markets, OTCQB, NASDAQ Stock Markets, NYSE or applicable trading market as reported
by a reliable reporting service (“Reporting Service”) mutually acceptable to the Company, said subsidiary and Holder
of the Class A Preferred Stock.”

F-25

3.
Conversion of Class A Series III Preferred Stock of PHI Group, Inc. into Common Stock of American Pacific Plastics, Inc., a subsidiary
of PHI Group, Inc.’s.

The
entire Class A Series III Preferred Stock of PHI Group, Inc. (i.e. fifty million (50,000,000) shares) may be convertible into
eighty percent (80%) American Pacific Plastics, Inc.’s Common Stock which will have been issued and outstanding immediately
after such conversion or exchange on a pro rata basis.

4.
Conversion Shares.

The
amount of shares of Common Stock of PHI Group, Inc., or alternatively, of a subsidiary of PHI Group, Inc.’s, to be received
by Holder at the time of conversion of Class A Series I or Series II Preferred Stock of PHI Group, Inc. will be based on the following
formula:

Where

CS:

Common Shares of PHI Group, Inc.

Amount of CS =

OIP + AUD

or alternatively of a subsidiary of PHI Group, Inc.’s.

VCP

OIP:

Original Issue Price of Class A Series I or Series II Preferred Stock of PHI Group, Inc.

AUD:

Accrued and Unpaid Dividends.

VCP:

Variable Conversion Price of PHI Common Stock or of a subsidiary of PHI Group, Inc.’s as defined above.

III.
REDEMPTION RIGHTS

The
Corporation, after a period of two years from the date of issuance, may at any time or from time to time redeem the Class A Preferred
Stock, either Series I, Series II or Series III, in whole or in part, at the option of the Company’s Board of Directors,
at a price equal to one hundred twenty percent (120%) of the original purchase price of the Class A Preferred Stock or of a unit
consisting of any shares of Class A Preferred Stock and any warrants attached thereto, plus, in each case, accumulated and unpaid
dividends to the date fixed for redemption.

IV.
LIQUIDATION

Upon
the occurrence of a Liquidation Event (as defined below), the holders of Class A Preferred Stock are entitled to receive net assets
on a pro rata basis. As used herein, “Liquidation Event” means (i) the liquidation, dissolution or winding-up,
whether voluntary or involuntary, of the Corporation, (ii) the purchase or redemption by the Corporation of shares of any class
of stock or the merger or consolidation of the Corporation with or into any other corporation or corporations, unless (a) the
holders of the Class A Preferred Stock receive securities of the surviving corporation having substantially similar rights as
the Class A Preferred Stock and the stockholders of the Corporation immediately prior to such transaction are holders of at least
a majority of the voting securities of the successor corporation immediately thereafter (the “Permitted Merger”),
unless the holders of the shares of Class A Preferred Stock elect otherwise or (b) the sale, license or lease of all or substantially
all, or any material part of, the Corporation’s assets, unless the holders of Class A Preferred Stock elect otherwise.

V.
RANK

All
shares of the Class A Preferred Stock shall rank (i) senior to the Corporation’s Common Stock and any other class or series
of capital stock of the Corporation hereafter created, (ii) pari passu with any class or series of capital stock of the
Corporation hereafter created and specifically ranking, by its terms, on par with the Class A Preferred Stock and (iii) junior
to any class or series of capital stock of the Corporation hereafter created specifically ranking, by its terms, senior to the
Class A Preferred Stock, in each case as to distribution of assets upon liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary.

F-26

VI.
VOTING RIGHTS

1.
Class A Series I, II and III Preferred Stock of PHI Group, Inc. shall have no voting rights.

VII.
PROTECTION PROVISIONS

So
long as any shares of Class A Preferred Stock are outstanding, the Corporation shall not, without first obtaining the majority
written consent of the holders of Class A Preferred Stock, alter or change the rights, preferences or privileges of the Class
A Preferred Stock so as to affect adversely the holders of Class A Preferred Stock.

VIII.
MISCELLANEOUS

A.
Status of Redeemed Stock: In case any shares of Class A Preferred Stock shall be redeemed or otherwise repurchased or reacquired,
the shares so redeemed, repurchased, or reacquired shall resume the status of authorized but unissued shares of preferred stock,
and shall no longer be designated as Class A Preferred Stock.

B.
Lost or Stolen Certificates: Upon receipt by the Corporation of (i) evidence of the loss, theft, destruction or mutilation
of any Preferred Stock Certificate(s) and (ii) in the case of loss, theft or destruction, indemnity (with a bond or other security)
reasonably satisfactory to the Corporation, or in the case of mutilation, the Preferred Stock Certificate(s) (surrendered for
cancellation), the Corporation shall execute and deliver new Preferred Stock Certificates. However, the Corporation shall not
be obligated to reissue such lost, stolen, destroyed or mutilated Preferred Stock Certificates if the holder of Class A Preferred
Stock contemporaneously requests the Corporation to convert such holder’s Class A Preferred Stock into Common Stock.

C.
Waiver: Notwithstanding any provision in this Certificate of Designation to the contrary, any provision contained herein
and any right of the holders of Class A Preferred granted hereunder may be waived as to all shares of Class A Preferred Stock
(and the holders thereof) upon the majority written consent of the holders of the Class A Preferred Stock.

D.
Notices: Any notices required or permitted to be given under the terms hereof shall be sent by certified or registered
mail (return receipt requested) or delivered personally, by nationally recognized overnight carrier or by confirmed facsimile
transmission, and shall be effective five (5) days after being placed in the mail, if mailed, or upon receipt or refusal of receipt,
if delivered personally or by nationally recognized overnight carrier or confirmed facsimile transmission, in each case addressed
to a party as set forth below, or such other address and telephone and fax number as may be designated in writing hereafter in
the same manner as set forth in this Section.

If
to the Corporation:

PHI
GROUP, INC.

5348
Vegas Drive, # 237

Las
Vegas, NV 89108

Telephone:
702-475-5430

Facsimile:
702-472-8556

If
to the holders of Class Preferred Stock, to the address to be listed in the Corporation’s books and Records.

Class
B Preferred Stock

Class
B Series I Preferred Stock

A.
Designation: The designation of the next twenty-five thousand shares of the previously authorized 100,000,000 shares of Preferred
Stock, with a par value of $0.001 per share, shall be Class B Series I Preferred Stock.

B.
Number of Shares: The number of shares of Class B Series I Preferred Stock authorized will be twenty-five thousand shares.

F-27

C.
Dividend: None

D.
Voting rights: Except as provided by law, the shares of Class B Series I Preferred Stock shall have the same right to vote or
act on all matters on which the holders of Common Stock have the right to vote or act and the holders of the shares of Class B
Series I shall be entitled to notice of any stockholders’ meeting or action as to such matters on the same basis as the
holders of Common Stock, and the holders of Common Stock and shares of Class B Series I shall vote together or act together thereon
as if a single class on all such matters; provided, in such voting or action each one share of Class B Series I shall be entitled
to one hundred thousand votes.

As
of June 30, 2018, there were 10,000,000 shares of Class A Series II Preferred Stock issued and outstanding.

Domestication
in the State of Wyoming

On
September 20, 2017, the Company applied for a Certificate of Domestication and filed Articles of Domestication with the office
of the Secretary of State of Wyoming to re-domicile the Company’s jurisdiction to the State of Wyoming.

On
September 20, 2017, the Company filed Articles of Amendment with the Wyoming Secretary of State to amend the authorized capital
of the Company as follows:

“The
total number of shares into which the authorized capital stock of the corporation is divided is one billion shares, consisting
of: nine hundred million shares of voting Common Stock with a par value of $0.001 per share; fifty million shares of non-voting
Class A Series I Preferred Stock with a par value of $5.00 per share; twenty-five million shares of non-voting Class A Series
II Preferred Stock with a par value of $5.00 per share; twenty million shares of non-voting Class A Series III Preferred Stock
with a par value of $5.00 per share and five million shares of voting Class A Series IV Preferred Stock with a par value of $5.00
per share. The relative rights, preferences, limitations and restrictions associated with the afore-mentioned shares of Class
A Preferred Stock will be determined by the Board of Directors of the corporation.” As of the date of this report, the Company
continues to operate as a Nevada corporation.

NOTE
16 – STOCK-BASED COMPENSATION PLANS

On
February March 18, 2015, the Company adopted an Employee Benefit Plan to set aside 1,000,000 shares of common stock for eligible
employees and independent contractors of the Company and its subsidiaries. As of June 30, 2018 the Company has not issued any
stock in lieu of cash under this plan.

On
September 23, 2016, the Company issued incentive stock options and nonqualified stock options to certain key employee(s) (Henry
Fahman – CEO/CFO) and directors (Tam Bui, Henry Fahman, and Frank Hawkins constitute the Board of Directors) as deferred
compensation. The options allow the holders to acquire the Company’s Common Stock at the fair exercise price of the Company’s
Common Stock on the grant date of each option at $0.24 per share, based on the 10-days’ volume-weighted average price prior
to the grant date. The number of options is equal to a total of 6,520,000. The options terminate seven years from the date of
grant and become vested and exercisable after one year from the grant date. The following assumptions were used in the Monte Carlo
analysis by Doty Scott Enterprises, Inc., an independent valuation firm, to determine the fair value of the stock options:

Risk-free interest rate

1.18

%

Expected life

7 years

Expected volatility

239.3

%

Vesting
is based on a one-year cliff from grant date.

Annual
attrition rates were used in the valuation since ongoing employment was condition for vesting the options.

F-28

The
fair value of the Company’s Stock Options as of issuance valuation date is as follows:

Holder

Issue Date

Maturity Date

Stock Options

Exercise Price

Fair Value at Issuance

Tam Bui

9/23/2016

9/23/2023

875,000

Fixed price: $0.24

$

219,464

Frank Hawkins

9/23/2016

9/23/2023

875,000

Fixed price: $0.24

$

219,464

Henry Fahman

9/23/2016

9/23/2023

4,770,000

Fixed price: $0.24

$

1,187,984

NOTE
17 – GAIN (LOSS) ON SETTLEMENT OF DEBTS

For
the fiscal year ended June 30, 2018, there was a loss in the amount of $92,780 on settlement of debts and a loss in the amount
of $94,539 from conversions of debts into common stock of the Company.

NOTE
18 – OTHER INCOME (EXPENSE)

Net
Other Income (Expense) for the fiscal year ended June 30, 2018 consists of the following:

OTHER INCOME (EXPENSES)

FY ended June 30, 2018

Interest expense

(1,352,736

)

Loss on loan/note conversions

(94,539

)

Loss on debt settlement

(92,781

)

Prepayment premium

(164,272

)

Write-offs

(77,500

)

Loss on issuance of stock

(9,310

)

Accrual for Preferred Stock Dividends

(4,681

)

Net miscellaneous other income/expense

(194

)

NET OTHER INCOME (EXPENSES)

$

(1,796,013

)

NOTE
19 – RELATED PARTY TRANSACTIONS

The
Company accrued $210,000 in salaries for the President and Secretary of the Company during the year ended June 30, 2018.

During
the year ended June 30, 2018, the Company received $25,000 for consulting service from American Laser Healthcare, Inc., for which
the president of the Company also serves as an interim Chief Executive Officer.

NOTE
20 – INCOME TAXES

No
provision was made for income tax since the Company has significant net operating loss carry forward. Through June 30, 2018, the
Company incurred net operating losses for tax purposes of approximately $40,551,299. The net operating loss carry forward may
be used to reduce taxable income through the year 2033. Net operating loss for carry forwards for the State of California is generally
available to reduce taxable income through the year 2023. The availability of the Company’s net operating loss carry-forward
is subject to limitation if there is a 50% or more positive change in the ownership of the Company’s stock.

“Under
section 6501(a) of the Internal Revenue Code (Tax Code) and section 301.6501(a)-1(a) of the Income Tax Regulations (Tax Regulations),
the IRS is required to assess tax within 3 years after the tax return was filed with the IRS.”

F-29

NOTE
21 – CONTRACTS AND COMMITMENTS

EQUITY
LINE FACILITY - INVESTMENT AGREEMENT WITH AZURE CAPITAL, INC.

On
March 6, 2017, PHI Group, Inc., a Nevada corporation (the “Company”) and Azure Capital, a Massachusetts Corporation
(the “Investor”) entered into an Investment Agreement (the “Investment Agreement”) and a Registration
Rights Agreement (the “Registration Rights Agreement”), each dated March 6, 2017 between the Company and the Investor.

Pursuant
to the Investment Agreement, the Investor committed to purchase, subject to certain restrictions and conditions, up to $10,000,000
worth of the Company’s common stock, over a period of 36 months from the effectiveness of the registration statement registering
the resale of shares purchased by the Investor pursuant to the Investment Agreement. The Company agreed to initially reserve 20,000,000
shares of its Common Stock for issuance to the Investor pursuant to the Investment Agreement. In the event the Company cannot
register a sufficient number of shares of its Common Stock for issuance pursuant to the Investment Agreement, the Company will
use its best efforts to authorize and reserve for issuance the number of shares required for the Company to perform its obligations
in connection with the Investment Agreement as soon as reasonable practical.

The
Company may in its discretion draw on the facility from time to time, as and when the Company determines appropriate in accordance
with the terms and conditions of the Investment Agreement. The maximum number of shares that the Company is entitled to put to
the Investor in any one draw down notice shall not exceed shares with a purchase price of $250,000 or 200% of the average daily
volume (U.S. market only) of the Company’s Common Stock for the three (3) Trading Days prior to the applicable put notice
date multiplied by the average of the three (3) daily closing prices immediately preceding the put date, calculated in accordance
with the Investment Agreement. The Company may deliver a notice for a subsequent put from time to time, after the pricing period
for the prior put has been completed.

The
purchase price shall be set at ninety-four percent (94%) of the lowest daily volume weighted average price (VWAP) of the Company’s
common stock during the five (5) consecutive trading days immediately following the put notice date. On each put notice submitted
to the Investor by the Company, the Company shall specify a suspension price for that put. In the event the price of Company’s
Common Stock falls below the suspension price, the put shall be temporarily suspended. The put shall resume at such time the price
of the Company’s Common Stock is above the suspension price, provided the dates for the pricing period for that particular
put are still valid. In the event the pricing period has been complete, any shares above the suspension price due to the Investor
shall be sold to the Investor by the Company at the suspension price under the terms of the Investment Agreement. The suspension
price for a put may not be changed by the Company once submitted to the Investor.

There
are put restrictions applied on days between the draw down notice date and the closing date with respect to that particular put.
During such time, the Company shall not be entitled to deliver another draw down notice. In addition, the Investor will not be
obligated to purchase shares if the Investor’s total number of shares beneficially held at that time would exceed 4.99%
of the number of shares of the Company’s common stock as determined in accordance with Rule 13d-1(j) of the Securities Exchange
Act of 1934, as amended. In addition, the Company is not permitted to draw on the facility unless there is an effective registration
statement to cover the resale of the shares.

The
Investment Agreement also contains customary representations and warranties of each of the parties. The assertions embodied in
those representations and warranties were made for purposes of the Investment Agreement and are subject to qualifications and
limitations agreed to by the parties in connection with negotiating the terms of the Investment Agreement. The Investment Agreement
further provides that the Company and the Investor are each entitled to customary indemnification from the other for, among other
things, any losses or liabilities they may suffer as a result of any breach by the other party of any provisions of the Investment
Agreement or Registration Rights Agreement (as defined below). Investor should read the Investment Agreement together with the
other information concerning the Company that the Company publicly files in reports and statements with the Securities and Exchange
Commission (the “SEC”).

F-30

Pursuant
to the terms of the Registration Rights Agreement, the Company is obligated to file one or more registrations statements with
the SEC within twenty-one (21) days after the date of the Registration Rights Agreement to register the resale by the Investor
of the shares of common stock issued or issuable under the Investment Agreement. In addition, the Company is obligated to use
all commercially reasonable efforts to have the registration statement declared effective by the SEC within 90 days after the
registration statement is filed.

This
Investment Agreement was amended on August 3, 2017 to allow for the reservation of 65,445,000 shares of the Company’s Common
Stock for issuance to the Investor pursuant to the corrected Investment Agreement.

The
Company has filed a S-1 Registration Statement with the Securities and Exchange Commission to include 7,936,600 shares of its
Common Stock for issuance in connection with the first tranche of the Equity Line Facility. The S-1 Registration Statement, as
amended, was declared effective by the Securities and Exchange Commission on January 11, 2018. The Company intends to access the
Equity Line Facility only when the Company’s stock prices reach levels that its management deems appropriate.

SETTLEMENT
AGREEMENT WITH THINH HUNG INVESTMENT CO.

On
August 3, 2017, the Company signed a Settlement Agreement and agreed to pay Thinh Hung Investment Co. a total amount of $381,000,
which includes the outstanding balance of $288,219 that is reclassified as Customer Advances in the Long-term Liability portion
of the attached balance sheet and accrued interest as agreed by the two parties.

According
to the Settlement Agreement, the Compapny will transfer or cause to be transferred at least 480,000 shares of Common Stock of
PHI Group, Inc. to an authorized represenatative of Thinh Hung. In the event Thinh Hung is unable to realize at least $381,000
from the sale of PHI Stock, PHI Group will either transfer additional Common Stock of PHI Group, Inc. or other marketable securities
to the authorized reprenesattive designated Thinh Hung or pay cash directly to Thinh Hung until the total amount of $381,000 is
reached. PHI Group, Inc. agreed to use its best efforst to pay off any outstanding balance by October 31, 2017. After the receipt
of at least 480,000 shares of PHI Group Stock by the authorized representative of Thinh Hung, Thinh Hung shall deliver and transfer
all the Vietnam Foods Corporation Stock to PHI Group, Inc. or its authorized representative. As of the day of this report, the
Company has not been able to transfer 480,000 shares of its Common Stock to Thinh Hung’s authorized representative.

MEMORANDUM
OF UNDERSTANDING WITH AQUARIUS POWER, INC.

On
August 9, 2017, the Company signed a Memorandum of Understanding (“MOU”) with Aquarius Power, Inc. (“AQP”),
a Texas company, to provide renewable energy technology to Vietnam. PHI has also made an investment to become a strategic shareholder
of AQP.

PHI
and AQP will form a joint venture company which will have the exclusive right to sublicense, sell, build, own and/or operate the
AQP energy systems in Vietnam on an exclusive basis.

PHI
will be responsible for: Obtaining all necessary approvals to build, own and operate AQuarius Energy System; Securing a binding
and acceptable power purchase agreement (PPA) from the governmental authority; Providing the land for the Aquarius Energy System;
Providing the construction and civil engineering know-how to build the energy pools; Providing management, engineering and operational
manpower to build and operate the AQuarius Engineering System; and Providing the interconnection of the AQuarius Energy System
to the national grid.

F-31

AQP’s
responsibilities include: Support PHI in obtaining the Power Purchase Agreement; Conduct a site survey and provide blueprints
for a tailor made Energy System; Provide technical support for the construction and operation of the Energy System (Includes training
for construction, installation and operations); Build, Ship, the AQuarius Energy System(s); and Install and commission the AQuarius
Energy System as required.

AQuarius
Wave Energy System is a land-based wave energy system that uses a combination of gravity and “buoyancy” found within
the interaction between air and water to produce power that can be used to generate electricity and / or produce potable water.
AQuarius is a baseload zero carbon footprint that uses no consumables and can be installed virtually anywhere on the planet that
is cost effective against any fossil fuel alternatives. The system, which can be built turn-key within 6 months of obtaining permits,
has an operating life of over 60 years and is clean, scalable, reliable, and extremely flexible. Its operating cost is comparably
low as hydroelectric systems.

On
October 6, 2017, the Company signed a new Memorandum of Understanding (“MOU”) with AQuarius Power, Inc. to expand
the scope of cooperation and provide the same renewable energy technology to Eastern Europe and the European Region. For Eastern
Europe the Company is in the process of planning to build a pilot unit in Romania using AQP technology. PHI also intends to make
additional investments in AQP. As of the date of this report, the Company has made an investment of $5,000 in AQuarius Power,
Inc. and intends to continue making additional investments via purchase of AQP’s Common Stock.

AGREEMENT
TO ACQUIRE 51% OWNERSHIP IN 400-ACRE MINING CLAIMS IN GRANT COUNTY, OREGON AND CLOSING OF TRANSACTION

On
September 2, 2017, American Pacific Resources, Inc., a Wyoming corporation (“APR”) and wholly owned subsidiary of
the Company, entered into an Agreement of Purchase and Sale with Rush Gold Royalty Inc, a Wyoming corporation, to acquire a 51%
ownership in twenty-one mining claims over an area of approximately 400 acres in Granite Mining District, Grant County, Oregon,
U.S.A. This transaction was closed effective October 3, 2017. The Company paid cash and issued 10,000,000 shares of Class A Series
II Preferred Stock, valued at $314,100, and a convertible demand promissory note in the amount of $24,310,400 totaling twenty-five
million dollars to Rush Gold Royalty Inc. in exchange for the mining claims. As of June 30, 2018, the balance of the convertible
demand promissory note was $24,048,500.

On
April 23, 2018, the Company’s Board of Directors passed a resolution to declare a twenty percent (20%) special stock dividend
from its holdings of Common Stock in American Pacific Resources, Inc., a subsidiary of the Company, to shareholders of Common
Stock of the Company as follows: (a) Declaration date: April 23, 2018; (b) Record date: May 31, 2018; (c) Payment date: October
31, 2018; (d) Dividend ratio: All eligible shareholders of Common Stock of the Company as of the Record date shall be entitled
to receive two (2) shares of Common Stock of American Pacific Resources, Inc. for every ten (10) shares of Common Stock of PHI
Group, Inc. held by such shareholders as of the referenced Record date. The payment date has been rescheduled to March 29, 2019.

TECHNICAL
ASSISTANCE AGREEMENT WITH AUBURN UNIVERSITY

On
September 25, 2017, the Company signed a Technical Assistance Agreement with Auburn University to conduct a research program in
order to determine the market segments related to supply and demand of medicinal and aromatic plants in the world, and then focus
more specifically on major production and consumption markets. The first four topics of the research program focus on the production,
medicinal applications, and market analysis of turmeric, saffron, bitter melon, and some major potential and aromatic plants.
The last topic covers the trends and solutions of switching from conventional farming to organic farming of these crops to meet
the future food and medicinal consumption. The research program began on October 1, 2017 and ended on September 30, 2018.

AGREEMENT
TO DEVELOP A 67,000-ACRE GOLD MINING PROJECT IN LAOS

On
November 4, 2017, American Pacific Resources, Inc. (“APR”) (https://aprgold.com/) signed a Business Cooperation
and Investment Agreement with Suda Lattana Co., a Lao company, to develop a 67,000-acre gold mining project in the Province of
Savannakhet, Laos.

F-32

According to
the Agreement, APR will be responsible for financing and operating the gold mining project and will share a majority of the project’s
net profits after accounting for the costs of capital and operating expenses. It is estimated that 3,527,000 ounces of gold can
be mined from this concession, subject to further professional study and verification. The Agreement is valid until December 31,
2066. As of the date of this report, APR has not begun this project.